Good morning, ladies and gentlemen, and thanks for joining the Mphasis Q3 FY 2024 earnings conference call. I am Rico, your moderator for the day. We have with us today Mr. Nitin Rakesh, CEO of Mphasis, and Mr. Manish Dugar, CFO. As a reminder, there is a webcast link in the call invite mail that the Mphasis management team would be referring to today. The same presentation is also available on the Mphasis website, www.mphasis.com, in the investor section under Financial and Filing, as well as on both the BSE and NSE websites. Request you have the presentation handy. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. Before we begin, I would like to state that some of the statements made in today's discussion may be forward-looking in nature and may involve certain risks and uncertainties. A detailed statement in this regard is available in the Q3 results release that has been sent out to all of you earlier. I now hand over the floor to Mr. Nitin to begin the proceedings of this call. Thank you, and over to you, Nitin. Thank you, Rico, and thanks, everyone, for joining us today. As we begin this calendar year 2024, Happy New Year to all of you. I know it's been a busy day with the Indian budget announcements. We appreciate your interest in Mphasis, and I trust everybody has had a chance to review our earnings release document. I would like to start by discussing macro trends before double-clicking on Mphasis performance numbers. As we have been calling out for a few quarters now, the market is characterized by a duality. Macro duality continues to play out. While we are still in the midst of macro headwinds, clients are also accelerating towards newer sources of value, such as AI, to stay ahead. We continue to see relentless prioritization in the market. Organizations are dealing with specific macro issues, and spending is not yet back to levels seen previously. There is focus on spend, especially discretionary, and on the other hand, there is a healthy desire for continued transformation and innovation. Our conversations show that while cost savings are still an important topic in tech budgets, companies are also looking at new sources of value to stay competitive. Gartner, in the latest IT spend report in January 2024, forecast that while 2023 was largely influenced by change fatigue, momentum should regain in going forward. IT services spending should see enterprises investing in organization efficiency and optimization projects as well. Balancing the macroeconomic conditions with clients' big hurry to innovate will be the key space for transformation partners. Since we were founded 25 years ago, we have been relentless in our commitment to lead with design and architecture, combined with our engineering DNA. We continue to work on supercharging our archetypes, powered by AI. Additionally, we have been investing to evolve and stay ahead through the AI-led archetype approach. Our prominent partnerships are, extend across platforms and niche AI and data providers. Our network ecosystem has several hyperscalers as well as specialized market-leading AI platforms and solution companies such as Code.AI, WorkFusion, and Databricks. We expect additional new archetypes as we expand on these offerings. We constantly focus on continuous investment in areas that are strategic to our clients, especially for their transformation and tech adoption journey. This investment has taken many shapes, from building organic capability through our tribe, to investment in partner-driven capabilities, to acquisition-driven competency build-up in areas such as AI, cloud, design, or the more recent Salesforce and CRM solutions. People are our greatest assets. Infusing the right talent in key areas will help us boost this growth. To that effect, let me summarize a few new leadership additions to the company. Ashish, who joins us in the Executive Council of Mphasis, as the Head of our Europe business. He brings with him over two decades of experience in this geography. Claudio leads our Microsoft Business Services delivery team based out of London as well. He is a highly experienced leader with over 20 years of expertise in spearheading global transformation programs across several industries. On the capability side, Alexey was the Chief Customer Officer at WorkFusion and brings in extensive experience to execute our digital workforce vision as a GTM leader for our AI business. With the acquisition of Silverline, we not only added a team of Salesforce experts to the Mphasis family, but also the leadership team, headed by Girish. Our insurance vertical, which is a key area of focus, is further strengthened by the addition of Ravi, who brings 32 years of leadership experience across the BFSI and is complemented by Surej in the Insurance Delivery leadership team. The leadership boost validates our commitment toward driving innovation-led growth and operational excellence for our clients. We are confident of delivering exceptional value to our clients and further strengthening our global position. As a testimony to our AI focus, we are pleased to announce that Mphasis has been named as the 2023 ISG Star of Excellence Award in the Emerging Tech segment for Artificial Intelligence. The award recognizes Mphasis for consistently upholding the highest standards of customer service excellence throughout the past year, as reflected in their feedback provided by the Mphasis customers. As per the report, Mphasis was recognized for its dedication to client centricity and service excellence following a recent success story with a leading U.S.-based home healthcare equipment and services provider. Faced with intricate technology challenges, the client sought our expertise, resulting in an astounding 49.5% reduction in manual issue remediation through implementation of an automation and AIOps platform that serves as an AI-driven orchestration layer alongside ServiceNow. This success highlighted our ability to address complex challenges in the U.S. tech landscape, showcasing innovation and client satisfaction while adopting newer technologies. You will further find details of this in our press release from yesterday. We are pleased with the pipeline growth outside of the top 10 accounts at strong double digits. Both BFS and non-BFS pipeline have grown well on a year-on-year basis, even after the strong deal wins over the past 12 months. Proactive deal pipeline is strong as well, with about 81% of our deals from proactive pursuits. A healthy composition of large deals in pipeline also underscores that digital transformation and accelerating digital adoption continue to be core themes for our clients. Almost all of our pipeline continues to be cloud driven, archetype-led, and is also well distributed across verticals and key themes such as data, Agile IT Ops, and platforms. Our deal wins for the quarter were at $2.1 billion, making our YTD TCV at $1.2 billion. Deal wins are stable, and there are a few things I'd like to highlight. Like TCV wins on a YTD basis include 14 large deals. We have won four large deals this quarter in Q3 of 2024. Notably, significant TCV wins continue to be from our beyond top ten accounts, and we are well distributed within our various service lines. Almost 85% of our deal wins in this quarter were powered by next- gen technology adoption. Our deal archetypes are further strengthened by capability acquisitions made during the year, enabling us to offer larger breadth of services. We continue to be structurally forward-leaning, making investments where we expect demand. As I mentioned earlier, pipeline remains strong and conversion has been steady, though still slow given the impact of seasonality and the macro factors. Large deals continue to show up in the pipeline, even as uptick is seen in smaller deals, too, providing clearer visibility to some revival and discretionary deals, while also boosting pace of revenue conversion. We continue to push for revenue growth, which is anchored in a strong client mining model and tech-led offerings. Our Q3 FY 2024 revenue came in at $402.3 million, a growth of 1% over previous quarter in CC terms. Our direct business accounted for 95% of our overall revenue in the third quarter. Mortgage business remained stable this quarter, driven by the new deal wins from previous quarters. The macro cyclical trends are yet to reverse, though we have seen the softening of the 30-year interest rates on the mortgage side over the last few weeks, but that still hasn't translated into any notable volume pickup. The general expectation is that mortgage rates will gradually decline through 2024, providing a platform for us to benefit from that cycle. Our clients continue to look for best-in-breed solution providers for a combination of cost takeout and transformation programs. We are expecting to see that pace of revenue pick up, especially in transformation deals through the year. Our direct revenue increased 1.3% QoQ in constant currency and declined by 5% YoY in the third quarter. Direct revenues growth in the quarter was affected due to seasonality trends in some of our clients. Our anchor geography, U.S., declined 6.8% in direct on a YoY basis and improved 2.7% sequentially. EMEA region and rest of the world grew YoY basis. We have been seeing good client wins and continue to see traction here. Our core service line, enterprise apps, constitute about 91% of our revenue. We grew 1.6% sequentially in constant currency terms in direct applications business. The impact of seasonality was, of course, seen in a few clients. BPO segment was impacted due to mortgage declines on a YoY basis. We expect this segment to see stability ahead. Moving quickly to the vertical performance, our mainstay vertical, BFSI, was up 0.3% sequentially on overall basis, weighed down by seasonality in a few clients. We saw sequential growth in insurance, logistics, and other verticals, driven by client and deal wins in recent quarter. Similarly, our others vertical in direct is growing quite well, as reflected in the 21% YoY revenue growth in Q3. We see good ramp-up in new customers added across segments, including in healthcare in the last few quarters. Top 10 accounts, ex mortgage, declined 10.5% YoY, mainly impacted by macro conditions, seasonality, and the regional banking issues earlier in the 2023. Our top 11 to 20 clients, ex mortgage, increased 11% YoY. Our 21 to 30 clients, ex mortgage, also grew 26.8% YoY. New client acquisitions revenue continues to grow well, sustaining its double-digit growth trajectory. Client mining stats remain healthy, QoQ and YoY. The YoY movement in clients in the 50 million+ category is purely due to mortgage declines on a YoY basis. We expect this to come back as mortgage trends resume. We are using this opportunity to continue to consolidate our market share and gain market share with our mortgage customers. Coming to our financial metrics. Our margin philosophy affords us the flexibility to manage our profitability in the face of revenue headwinds. In this quarter, the reported EBIT margin stood at 14.9%. This was our first quarter with consolidation of Silverline, which impacted the EBIT by 1.1% negatively. Despite seasonality, our EBIT margin for the organic business improved over previous quarters through various operating levels. Reported operating profit declined 1.1% YoY on a reported basis and declined 1.9% sequentially. Losses in cash flow hedges impacted margins in Q3 by 40 basis points. EPS for the quarter at 19.8 was a decline of 4% sequentially, impacted primarily by the Silverline acquisition. Cash flow generation for the year to date was at $182 million, which is 100+% of PAT for the period. Adjusted cash generation in Q3 was $70 million, adjusting for one-times. DSO improved by one day at the end of Q3 2024. This quarter, we continue to retain our focus on the micro and on ensuring operational stability amidst the duality in the macro environment. I'll leave you with a few points. We continue to focus on building for growth and have been steadily investing in leadership, as I called out in the previous few minutes. We both built and bought capabilities and have made investments in areas where we are seeing and expect demand. We're structuring to capture market opportunities as demand conditions pick up. We see a resilient pipeline with steady deal wins across archetypes. Though macro-driven overhang continues in select verticals, we saw stability in revenue and seasonality factors. The mortgage business was also stable in third quarter, led by new deal wins in previous quarters. We are pleased with the execution rigor in delivering expanded adjusted operating margin despite seasonality impact. Updating on the Silverline integration, our synergy realization is on track, and we remain focused on the same. As for outlook for Q4 2024, a few key messages for the quarter. We'll continue to focus on integrating our capabilities and we'll execute to capture growth opportunities. Our focus is on converting deal wins to revenue based on the healthy wins that we've seen in the first three quarters of the year. We do expect to deliver growth beyond seasonality factors, and growth will be led by BFS and TMT. We do expect to see continued stability in the mortgage segment and end FY 2024 with a strong Q4. With a resilient pipeline and healthy order book, we expect to drive revenue diversification outside our top 10 accounts. On the margin front, we retain our message of margin stability. Excluding the acquisition impact, our operating margins will remain in the stated band of 15.25%-16.25% in the upcoming quarter, with a continued focus on operational rigor, giving us increased confidence on the trajectory of our performance. On that note, moderator, let's open it up for questions, please. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah. Hi, good morning, Nitin, Manish. Wishing a Happy New Year. I had three questions. The first is on the seasonality aspect. How the information technology vertical or the high-tech vertical actually saw a sharp decline this quarter. Was that purely furloughs? And should we anticipate a recovery in furloughs going into next quarter? Because some of our peers have been sort of suggesting extended furloughs and so on and so forth. So just wanted your thoughts on that. The second is on the margins Q. So we have seen margins sort of improve significantly on the insurance vertical and BFS as well. So is there any one-off there? Because utilization has come off quite a bit, and should that be a near-term headwind? So that's the second one. And, finally, the deals that we won in Q1, have they largely ramped up or is it still in flight? I think those are the three questions. Thank you. Thanks, Nitin. I'll take the first one, and the last one, and then I'll have Manish talk a little bit about the margins status. So I think on high tech, there was a combination of two factors. One, there was some milestone revenues in the previous quarter, and definitely the seasonality and the furloughs impacted third quarter. As we go into Q4, we already called out that growth will actually be led by BFS and high tech, and the TMT vertical. And the primary driver for that is one, of course, reversal of furloughs. At this point, we are not seeing extended furloughs in our portfolio into Q4. And of course, based at the back of certain recent deal wins. One of the four deal wins that we are announcing in Q3 is actually in high tech as well. So I think from that perspective, we do believe that we are back on the growth path in high tech starting Q4. On the deals that were won in Q1 and Q2, I think the deal conversion to TCV has picked up, at least, especially in the recent few weeks. And we still have order book to consume coming out of those deal wins earlier in the year. And hence, despite the obvious, you know, heavy focus on the headline number of the recent deal TCV quarter, I think the confidence that we have in continuing to consume the already won TCV gives us the freedom to, I would say, begin well in Q4. Manish, you can take the margin question. Hi, Nitin. Good morning, and happy New Year to you, too. So this quarter, margin has had quite a few impacts. First of all, Silverline acquisition had a structural impact, because Silverline comes with higher gross margin and higher sales, and general and administrative expenses. So that has an impact on both SG&A as well as on gross margin, on the positive side. And at the same time, Silverline acquisition came with charges which are amortization of goodwill, sorry, amortization of intangibles and the retention bonuses. And you know, that is reflected in EBITDA remaining constant. If you see 18.2% of last quarter remains at 18% this quarter. Outside of that, furlough had an impact on revenue and a slight adjustment to what Nitin said. There's no expected continuation of furlough beyond the quarter. However, there are a few clients who have a quarter which is different from ours, so October, November, December versus August, September, October. So that may have slight, you know, impact in Q4 of ours and Q3 of ours, but majority has come in in Q3. Having said that, that impact of furlough does not have any impact on margin because of all the measures we took to align our leads and our subcontractors to avoid most of the charges. We, you know, if you look at the furlough and the Silverline impact adjusted, the net impact is 1.1% on EBIT, as we had guided earlier. Despite that, we expanded the margin by 0.5%. If you look at from a going forward per- Ladies and gentlemen, please stay connected while we reconnect the management line. The management line is reconnected, so you can go ahead, sir. Not sure, Nitin, where I lost you, but effectively what I was saying is that despite Silverline impact of 1.1%, we would have been at 14.4%, but we came out at 13.9%, primarily driven by operating metrics and, you know, the focus on execution. We believe some of that will be retained and some of that we might like to invest back as we go forward, continuing with the philosophy of investing for growth and being in that range of 15.25%-16.25%. Sure. Perfect. Thank you so much. All the very best. Thank you. Our next question is from the line of Manik Taneja from Axis Capital. Please go ahead. Hi. Thank you for the opportunity. I have a question similar to what Nitin raised with regards to the margin performance in the current quarter. We've seen our gross margins being the highest since third quarter FY 2021. If you could talk about some of the factors that have driven such a strong performance in the current quarter, given the fact that we also saw a step up in terms of onsite revenue mix and also phased revenue headwinds because of furloughs? So, Manik, good morning. You know, there are puts and takes. There are structural changes, like I mentioned, Silverline, benefiting gross margin and increasing SG&A. There were benefits that came in because of exchange rate gains, losses coming down, as we have already articulated in MD&A and our press releases. And, I think the primary driver was our focus on execution, like we have maintained earlier. We have operating-- we had operating levers. I know that utilization looks low, but utilization carries the impact of furlough, so it's not furlough and utilization in addition. Furloughs are already baked in, in utilization, and that is what is reflecting in the margin, as well. So at an overall level, you know, we have focused on making sure that we align our costs with the revenues, and our clients help us in doing that, right? Because these are all planned, you know, activities. But generally speaking, what I would recommend we look at is the EBIT movement, which is what we have always maintained, right? That at an EBIT level, we were expecting 1.1% decline, but we are able to ensure that we deliver 0.5% higher than that. Yeah, I think, if I can, Manik, just add a little bit more qualitative color to that. I think we've maintained two things over the last few quarters that consistency. One, we'll continue to invest in taking a pioneering position towards growth, and at the same time, we have enough operating levers available in the business to find ways to keep the margin lines stable. We planned for the digital and integration acquisition months in advance of closing the transaction, and we put in place action from the day we actually announced the transaction. So that, while it gave us the opportunity to expand the reported GM, at the same time, we also already had actions in place, given that most of these, you know, factors around seasonality, furlough, and the impact of acquisition were known to us well in advance. So I think from that perspective, I'm really glad with the way the team has executed. Some of this will stay in our P&L going forward, and some of it obviously will go back into the business as we expand the GM efforts. And of course, we still have work to do from an integration execution perspective with the acquisition that we announced. So I think execution reserve of what we can control, which is our P&L and profitability, very, very strong. Of course, we can't control the seasonality or the macro, hence we're very focused on micro on that. Sure. Second question was for you, Nitin. Basically, over the course of last 18 months, we've had challenges across our top client portfolio. Some of them because of macro, some of them also because of customer-specific situations, and because of which- Yeah. Some of the dealings that we have, one, essentially haven't ramped up or converted into revenues. If you could talk about your outlook from a next six- to nine-month standpoint on that front, and also talk about the potential risk from insourcing or capital expansion at one of your large logistics customers. So, Manik, there are three separate issues that, you know, you're raising in that one question. The first one is around just the top line top ten clients' performance in terms of the impact of macro. I think there's definitely squeeze in discretionary spend that has led to some softening in spends, and we've seen that play out across more than one top customer. We are very, very focused on our, our wallet share and expansion of addressable market when it comes to taking a very, very bottom-up approach to these customers. So very happy to report that we've not lost wallet share in any of our top ten customers from that perspective, very, very good execution by the team in staying very focused and sharp, despite tough, challenging macro. Second, there was definitely an impact of mortgage declines in some of our top clients because we have multi-tower businesses in many of these customers. I think we've called that out consistently over the last four to five quarters. As we see stability, we'll probably see that, you know, reversal happen and we'll now benefit from the cycle as it turns on the other side over the next few quarters. Hard to pinpoint whether it's going to be this quarter or the next quarter, but we pinpointed the bottoming out purely based on our bottoms-up deal wins and volume share gains. But as the market turns, we will definitely see the impact of that on a go-forward basis. When it will happen, you know, again, we'll have to wait and watch and see how that plays out. Some client-specific issues coming out of the regional bank crisis that we've talked about. That definitely was an unexpected big blow to our top client category. And I think we seem to have kind of mostly washed that through our quarterly numbers as we speak. Now we are focused on really monetizing the opportunity that provides us. And the final one is the one you're raising, which is, you know, how do we operate in terms of a competitive environment with clients' captives? I think we've been used to that for many of our top customers. Almost every, each and every one of our top clients has a very large presence in the captive. We will not be competitive if we only provided cost arbitrage solutions, and hence, if you go through the themes for the last many, many years, especially the last three or four years, the thematic approach has been building capability, competency and differentiation. And hence, we are very, very comfortable working alongside the captives. While it may seem like a headwind in the short run, because that current movement definitely, you know, favors the captive in the short run, but at the same time, with these same customers, we've actually seen expansion of our transformation deals and large deal pipeline as well. So I know it doesn't... You know, we focus more on aligning and partnering with the captives versus seeing them as a threat and competitive in situations. Sure. Thank you and all the best for the future. Thank you. Thank you. Our next question is from the line of Sulabh from Morgan Stanley. Please go ahead. Yeah, hi. Thanks for taking my question. So my first question is more of a clarification. So I just wanted to understand that versus the last conference call when we were sort of expecting a growth in Q3 and Q4, and now ex of seasonality, we've seen stability in Q3. So is there any new headwind or challenge that has come in versus our expectation in Q3, ex of higher than expected furloughs that we've talked about? I think there are two primary things to call out. One, definitely the impact of furloughs was a fair bit higher than what we've normally seen in the business, and this is kind of an across industry phenomena. The second area really has been what we've been calling out, which is ramp-up of existing sold business, and I think some of those deals have taken longer. We have seen the pace of conversion pick up in the last, I would say, three or four weeks. But definitely, you know, there were some push outs in Q3 that will probably flow back in, into the business in Q4 and Q1. I think those are the two primary reasons, and hence, it was important for us to call out the fact that we've seen stability, you know, at an organic level. And also, I think the... You want to add something more? Yeah. So, Sulabh, you know, as we had discussed, right, we were expecting some improvement in the conversions, and that was based on conversations that we were hearing from the customers, which was kind of driven by what the macro indicators were, right? And there was an indication that there will be a rate change by Fed and, you know, while it had not happened, but it was indicated that there will be. There were some, you know, murmurs around, you know, change in that stance, and as we look at it, the recent announcement that it will not happen till March. So I think it's more about being cautious on how the customers look at the environment, what does it do to the economy and stuff like that. From a deal closures and conversion from deal to revenue perspective, not much has changed since the last earnings. You know, as we had mentioned in the last earnings also, you know, furlough was the biggest impact in Q3, and a large part of that will come back in Q4. Currently, we are hopeful that we will be able to be positive beyond the reversal of the furlough impact. But how big it will be will depend on, you know, how the conversions, conversations go on. No, understood. Very clear. Just a quick follow-up. You know, most of your peers who have reported, they've been talking about a conversion of deal wins won in the past 6-9 months happening on time and, and, you know, converting to revenues. So just wanted to understand, you know, from our deal wins perspective in the past six to nine months, I mean, what could be happening differently in these deals? Is this the nature of work which is different, or, you know, what could be driving this? Yeah, again, I think it's, I mean, to us, it seems like a pretty industry-wide phenomena where the conversion has been slow. And as I mentioned, it seems to have, you know, at least started to get moved towards normalization in the last three or four weeks, but I think there's still ways to go for us to consume the PC wins from Q1, Q2, Q3. So, I mean, to, to me, I don't think it is an exception or a standout in that phenomenon. It seems pretty industry-wide. But having said that, there's definitely an element of the fact that a lot of our businesses and a lot of our wins are proactive, so that does bring in a slight nuance to the type of work and the ramp-up times that we take, but I think it's not something that we are an outlier in. I understood. And then, my second question was on the margins bit. I just wanted to understand, Manish, that out of this 1.1% impact that has come in- Sorry to interrupt, sir. May I request you to use your handset, sir? There's a little disturbance from your line, sir. Is it better now? Yes, sir. Please go. Much better. Thank you. Yeah. So, with respect to margins, just wanted to understand, Manish, that this 1.1% impact of Silverline does it have some one-time impact because of transaction costs involved? And what could be the going forward, you know, run rate impact of this? So, in the acquired balance sheet, Sulabh, there were some positives and there were some one-timers, and that plus the impact of amortization and, what we believe we can generate as synergy with the integration plans, I think all of that combined is the 1.1, which is the indication we had given. And, some of this 1.1 will go away in, in quick, quick time, and some of it will happen over a period of time as the amortization runs off. Understood. Those, those are my questions. Thank you for taking my questions. Thank you. Our next question is from the line of Sudheer Guntupalli from Kotak Mahindra AMC. Please go ahead. Hi, thanks for the opportunity. First question, Nitin, weak macro has been the lowest common denominator for most of the companies. However, some of our comparable peers have been delivering almost 20 percentage points higher growth. Even the Tier One companies with much, much larger revenue base seem to be outperforming us on growth. So when we introspect about this growth differential, is there any internal or structural issue that bothers you? Or is it just a portfolio mix differential wherein we are sort of exposed to more pronounced cyclical headwinds than others due to the mix issues? I think the so let me answer that in three different ways. First, part of it is what you said, which is the portfolio issues. When I say portfolio, it's really the exposure to certain segments, and within that, obviously, the harder than industry exposure to just the cyclicality of the mortgage business. Second, I think the impact that we saw in the middle of the year coming out of the regional bank crisis, and we gave you some disclosure on the exposure, that definitely was. I mean, it's still a bit unusual, especially from a peer group perspective. And while we pride ourselves in building deep, long-term, large relationships, sometimes that doesn't go your way when you have, you know, out of the ordinary issues that hits you. And thirdly, on the structural side, I think we've constantly done a pretty deep evaluation of how we need to structure the company, both from a GTM perspective, from a capability solution perspective, and of course, from a delivery perspective. We did announce a reorg earlier in 2023 around the vertical-based cohort GTM structure, while we still stay very focused on each account. That is definitely showing signs of you know synergy and growth pick-up, especially as you look at the data I shared with you around 11%-20% and 21%-30%. And I think that will continue to play out as we diversify away from top 10. And I think that's. So that's one. Two, I think on the structural side, we did believe we needed to make some changes in some of our industry verticals, and we announced that as well over the last, you know, few months, and we called it out today again on the insurance side as well as on the AI side. So I think it's a constant work in progress. We'll constantly continue to evaluate things that we need to do, changes that we need to make in both structure and/or leadership, as well as augmentation of capability, again, from either from a buildup, organic buildup perspective or you know, from an acquisition perspective. So I think it's a. We've been very busy in the last 12 months across all of these fronts. You know, we're not standing still waiting for the macro to return. We are driving a lot, lot of these actions, and you can see those play out through the last three or four quarters. Sure, Nitin. So, what you are highlighting is that, internal execution issues or, any company-specific issues, you don't see at this point, rather it's only going in the positive direction. Is that the correct way to understand? Yes. Yes. Okay. I think we are giving you transparency on that as well as to how we are driving that. Sure, sir. That, that's very helpful. Second is a quick clarification. What you're saying on Q4 outlook is, you know, growth, there will be growth ex of seasonality. So are you expecting positive seasonality from Q3 to Q4 or maybe negative seasonality? I mean, just a clarification on what do you mean by seasonality, positive or negative? Yeah, I think what Manish meant was that there will be some reversal of the furlough. So if we took an impact in Q3, we will not have the same impact in Q4. So that will give you some growth. But what the guidance that Manish was giving on that answer was that we expect growth to be more than just the reversal of furlough. Okay, understood. Understood. So irrespective of that, reversal at tailwind, on top of it also, you will have growth in the portfolio. That's what you're saying? Yes, because we are focused on executing that TCV to revenue conversion that we called out. Thank you very much, sir. All the very best. Thank you. The next question is from the line of Girish Pai from Nirmal Bang Equities Private Limited. Please go ahead. Yeah, thanks for the opportunity. Nitin, if you can give us an outlook on various segments of your business into 2024 from a demand recovery perspective, the mortgage part, the non-mortgage BFS part, and the non-BFS part, how would that look like? Yeah, I can give you a little bit of nuance. I think, let me give you the nuance on all the three and then probably a couple more double clicks. We basically think that the mortgage business bottomed out for us over Q2, Q3, which is kind of what played out in the last quarter, and not because we called a bottom on the macro cycle or the interest rate cycle, but because we focused on what the volume projections were and how much more new business we were able to win as we consolidated few of our competitors out, and in some cases, even took on new business from customers outsourcing to us. That, while that played out, it hasn't yet fully played out because we, we still expect that to play out and actually become a growth driver over the next four to six quarters. Some of it is cyclical, some of it is purely based on, on, as we see, expansion of those, those deals going into those customers. On the BFS side, I think it's a little bit more nuanced than just one big block of BFS, because there are still segments of BFS that are stressed, especially market making, you know, investment banking, deal, deal volumes. IPO volumes are still not nowhere near where, where they're, in a normalized year, where they would be. I mean, the IPO market's pretty much, you know, dry. So I think that segment is probably gonna be, a lot harder to recover, and it will only recover once the deal activity improves in the market. Where we have seen a lot of investment go in is consumer banking, asset and wealth management, and governance and risk areas. In those areas, I think the spend actually has started to trickle back up. We've seen a fair amount of activity in areas like, you know, infusing AI into customer experiences, and that's why you've seen that play out even with companies like Salesforce. And we've seen initiatives around using data to drive customer experiences and customer segmentation. Again, you've seen that play out with players like Snowflake and Databricks. And of course, the hyperscalers have started to report an uptick in consumption because clients have resumed their transformation efforts in moving towards a refresh of the new tech infrastructure, pretty much across the board, including banking. On the non-banking side, I think, we have, of course, set ourselves up with three or four new verticals. I think the travel business continues to boom quite well, and we are doing everything we possibly can to expand our footprint in travel and logistics, especially travel and transportation, you know, within that sub, you know, sub-segment. And healthcare for us is purely a wallet share gain issue. It, it's pretty much a non-cyclical business anyways, but for us, I think it's really about continuing to expand our wallet share, you know, with the customers that we acquired in the last two years in that segment. It's still one of our smaller businesses. And I think insurance is a lot more about us executing better, and that's why we reset that business over the last six months. We started to see some early results, and we have to just continue to execute that because the need for that business are pretty similar to the needs that that they kind of fast forward from the, you know, from a BFS trends perspective. And I think you talked a little bit about our TMT business. We are pleased with the progress that we are making, not just in high tech, but in telecom. We had a large deal in telecom this quarter that gives us an entry into a new sub-vertical within TMT. We still don't have a lot of media in there, but I think, you know, one step at a time, continue to focus on expansion of high tech as well as the newly won deals to be converted. So I think it's, as I said, early days. We are, we are seeing some uptick in activity. We have called out for some green shoots. We have to wait and see how the macro turns out, how the geopolitical environment shapes up. And also, remember, this is, probably one of the heaviest election years in the history, in the recent history, with, with almost 50 elections across the world. So there's a, there is some element of that that we have to keep an eye out for as well. But broadly, bottoms up, you know, very focused on just executing to these trends that I talked about. My second question, Nitin, is more industry related, not so much Mphasis specific. We've seen a lot of the cloud players announce results recently, and, if you look at the last 24 months, we've seen the cloud players deliver anywhere between 10% and 30% kind of YoY growth. 10%, maybe 10%-12% for AWS, and the others have delivered 20%-30% growth. It's probably a naive question, why is that not translating into IT services demand? Because the cloud players seem to be doing fairly healthy revenue growth. So, I mean, there is a very nuanced correlation between, you know, expansion of compute spend versus spend in IT services. And the reason for that is, once you've actually, you know, move your environment or your infrastructure to a hyperscaler, for incremental consumption of compute, you don't really need any more services work, because you've now made your infrastructure variable, and as you see, you know, volumes go up or down, there is no new tech services required to do that. And so the biggest lift in consumption is in consumption of compute, which is getting the infrastructure and the application estate up onto the cloud. From there on, you know, yes, there is a run element, but it's a fraction of what it used to be, and that's why you've seen a pretty large, you know, reshaping of the industry from an IT operations perspective. It's not what it used to be, and hence, you know, the infrastructure line of business is completely being renovated as well. Second area where you see growth, once the client is on cloud, is in areas such as adoption of data platforms and/or adoption of all things AI. You can't really create an AI strategy unless you've cleaned your data pipelines and you have all data available in a manner that it can be consumed on the cloud. I think the next phase of growth for tech services will really come out of providing these solutions to applications and customers that have already embraced the cloud, and in many cases, of course, they will continue to build new applications. Again, going back to this theme, hence the focus for us, at, almost at a maniacal level, is how do we continue to build capability that brings us closer and closer to what the customers will need to do in terms of deploying these solutions even after they get on the cloud, right? Just by itself, having cloud capability is not a long-term growth formula. Thank you. Thank you. The next question is from the line of Abhishek Bhandari from Nomura. Please go ahead. Y eah, thank you. Nitin, I had two questions. First, if you could quantify the, you know, furlough impact for this quarter. Just trying to get a sense of, you know, the kind of growth, what you could get into for. Hi, Abhishek. Manish here. You know, as you know, we don't specifically call out a number. What I can tell you is that furlough is significantly higher than what it was last year, as we have been talking about it before we got into the quiet period. And you know, because there is a difference in the calendar quarter of us and the client, some of it is you know, going to spill in Q4, but majority of that has come in Q3. And as that reversal happens in Q4, we will get that number back. But at a very high level, we would have been, and as we have mentioned in our presentation as well, we would have had a stable quarter without Silverline if the furlough had not happened. Sure. So that's the next question, sir. You know, how is Silverline, you know, progressing in terms of revenue metric and margin metric for you? I know it's very early for you, but, you know, when we acquired, I think the annualized run rate of revenue was around $84 million. So let's say $20 million-$21 million quarterly revenue run rate. Where are we tracking on that number? I think, we disclosed out that the revenue, in quarter revenue from Silverline was, a little over $15 million. And that's obviously based off of the fact that, we acquired them from a competency standpoint and, of course, from a, for the ability that, that capability brings to us, and that capability includes the ability to work with the Salesforce channel. We've done a fairly, thorough analysis of which of those customers we are likely to retain, because we operate in in slightly different market segments from the size of customers perspective. We are more focused on the enterprise segment, and they've had a combination of enterprise and mid-market. And the next big area of focus for us really is driving synergy into our customer base and, of course, making sure that from a cost and margin standpoint, we're able to actually create cost synergies as well. I think, as I mentioned in my previous answer, we began on that, you know, planning for that well in advance. We executed some of those actions already, especially on the cost side, and we are very pleased by the early adoption of some of those capabilities with our current customer base, including early wins in our portfolio. So I think, that's kind of, to me, the thesis of the investment is playing out quite nicely. Still early days, and we will give you another update over the next quarter or two. But to me, the thesis of, you know, introducing AI-led transformation in customer experiences is really the arc that we've been building all the way from design services that we acquired to build Blink, plus the partnership that we did on conversational AI, plus the hyperscaler partnerships around things like AWS Connect and the refresh of the contact center infrastructure, and combine that with the AI-led, you know, customer experiences through Salesforce. So I think it's the stitching together of the entire archetype is the way to think about it. Got it. Thanks, Nitin, and all the best. Thank you. Thanks, Abhishek. Thank you. The next question is from the line of Dipesh Mehta from Emkay Global. Please go ahead. Yeah, thanks for the opportunity. Couple of questions. Sorry to interrupt, sir. May I request you to use your handset, sir? Your audio is muffled. Is it better now? No, sir. It's still the same, sir. It's okay, Dipesh. We can hear you. It's fine. Okay, sir. Okay. Thank you. So couple of questions. First, just want to understand the way we report deal intake. If you can help us understand, because you, I think earlier you used to give net new. I just want to reconfirm, the deal intake, what we report is net new number, or is there any change in the definition we used to give? No, no, we have not changed any definition. It is consistently net new. In a way, it doesn't contain any renewal of the existing business, the way we report? No, it does not. So when I look at it, let's say last nine months, $1.2 billion net new deal intake. In a way, even if you assume five-year kind of period, $240 million kind of incremental revenue will flow into revenue line item. Right way to understand it? And because I am assuming, because you said we maintain wallet share and all those things, so renewal rate assumed to be reasonably high. So— The only fallacy there is, runoffs and the discretionary spend cuts, and of course, in some cases, destruction of volume around, mortgage business itself. Fair. And in some cases, there are. We think in the portfolio of the client, in terms of how much is insourced, outsourced, even though they may be temporarily as they sit on higher headcount, because of them having hired more people. Understand. Second question related to is, now you indicated some kind of delay in revenue conversion from the already signed deals. Now, can you help us understand what factors driving that delay in revenue conversion? Now, macro factor is known. In nine months, nothing has changed, so I don't expect client will relook some of those decisions, which we, they took in last nine months. I just want to understand why they are deferring it once they have signed deal. Second thing is, what gives you confidence some of it will change? Yeah. So, Dipesh, again, let's look at across the industry. It's not— There have been instances of clients actually having canceled deals. You know, we have to work really hard to make sure that sometimes what happens is, a program may be funded, but three or four months into the program, it either gets deprioritized or gets defunded... or the deal gets deferred to two quarters out. So I think a lot of that played out across the industry. We've seen recent cases of some of our peers announcing canceled deals for a number of variety of reasons. This is something that we have to just deal with as the cycle plays out. And the reason why our confidence is, is what it is, is because we are in constant. You know, many of these are existing customers. We have a pretty good idea of how their priorities are panning out for the current year. In many of these cases, the spend may have been deferred, or in some cases the spend might actually get converted. We may have had an overall spend agreement with them, and they can spend in areas that they may not have intended to spend in to begin with. So we get priority and preferential preferences because of the commitments that they make to us. Understood. So broadly, whether we have seen any cancellation, because you indicated a couple of examples where industry players might have seen some of our peers. No, we haven't. We haven't seen any such thing. Not at all. Okay, understand. And last question is about... I think, two questions rather. You indicated top ten client performance on YoY basis got impacted by seasonality. Largely, you are referring to higher- than- usual furloughs or anything— Yes. Any other element? Yes. Higher than usual, and also the impact of some regional bank issues that will play out in the YoY numbers as well. Understand. Last question is others. If I look, others is doing reasonably well, from vertical perspective. Can you help us understand what is driving growth there? Even though it is small, but consistently it is growing well, so if you can provide some sense around it. Thanks. It's primarily healthcare at the base, because, I mean, we, we will start reporting that out separately, perhaps in FY 2025. But I think we'll call that out, it's primarily driven by the growth in our healthcare business. Understand. Thank you. Thank you. Thank you. Our next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead. Yeah. Thanks. Thanks for the opportunity. Based on whatever replies you have given, is it fair to assume that the conversion of deal wins in the first nine months, especially the first quarter, is not materially happened in Q2, Q3 revenue, and may start happening in an incremental fashion from the fourth quarter? Is it right way of looking at it? Not necessarily, right. I think, you're drawing a straight line from quantum to revenue. We are... As I mentioned in the previous question, there is a clear variable which comes into play, which is either ramp down or project closure or discretionary spend cut. So I think... And of course, as we talked about the ramp down and client-specific issues coming out of the regional bank crisis as well. So I think it's a combination of all of those things. I don't think it's fair to assume that none of those deals converted. Some of them converted pretty quickly. Even as we were reporting in Q2, those deals had converted, and some of these have taken us a bit longer. So I think it's a mixed bag. I don't think there is one clear straight line trend that you can draw from that. Okay. Nitin, can— But, having said that, just, just the last point, having said that, we do still have some backlog to consume from the deals that are won in the first half of the year. Okay, okay. And, just any update on any of client-specific issue within top ten are you worried about? Or you believe stability is emerging on a going forward, though may not give you any turnaround growth prospects, but, leakage and the ramp downs may be slightly behind, especially in the top ten clients. I think, again, I addressed that earlier as well when we talked a little bit about the concern that was coming out of the captive and the and such. I think we've seen, we still have some ways to go when it comes to turnaround because the mortgage effect will play out over the next few quarters. As I said, some of those clients do sit in our top 10 business because they are multi-tower customers. Almost all of our top clients, in banking especially, are multi-tower, where we do work across multiple service lines, including mortgage. I think from a leakage standpoint, to me, it doesn't look like there is any large risk to call out. We are still obviously focused on ensuring that as a category, these customers grow as well. I, we, you know, not for a minute I want you guys to assume that we are saying that our top ten clients will not grow. It is very much still a very growth, you know, very power-leading growth stance, because there are still, there are still volume gains, there are still addressable market expansions, and there are, they're still investing in transformation programs. I think the issue is, can we constantly grow other segments around these clients faster while continuing to grow these clients? It's the stance that we are taking. And, and that's, that's how we expect 2024 to play out as we go forward. And I think if you're calling for Q4 growth to be led by BFS, then definitely means that some of our top clients will see growth coming back. Okay. Okay, and Nitin, Q2, Q3, new business TCV wins were $240 million, $50 million versus our earlier average being $300 million-$400 million. So is it the deal wins are as per your expectations, or there is, could have been better because of macro issues, these deals have been right-shifted and the deal win pickup can improve on a going forward basis? Yeah. I think, again, the way the business works is that there is a certain timeline from the time you originate a deal to the time you convert it to closure, to the time you convert it to revenue. We sucked in a lot of closures in Q1, and of course, that meant that we had to work through the pipeline over the next six months to bring additional deals upfront. So I think the right way to look at it is to look at a slightly, you know, longer term average basis, maybe a four-quarter average is a good, good, good measure versus a quarter-on-quarter number. Because this is only net new deals, we are not including renewals in here, so that there's no, there's no run rate effect of renewals coming into these numbers. Secondly, I think the real metric to focus on is pipeline. And I think we've given you pretty detailed pipeline analysis of where we are, both in BFS, non-BF S, and of course, by breakout by archetypes or tribes. A couple of things to note there. One, pipeline is actually double-digit growth, even on a sequential basis, pipeline is up. Some of these deals are still early stage. Some of these are very large deals. So we'll have to just focus on making sure that we go through the pipeline and continue to convert that through the next two or three quarters. Of course, we would like the TCV number to be higher this quarter as well as the last quarter, but it just, the focus really has to be convert, you know, moving the deals through various stages in the pipeline, and that's what we're continuing to drive as we go through here. Okay. Okay. And the last question to Manish, in one of your earlier comments, you said if furloughs would not have been there, the organic business ex of Silverline would have been flattish. Is it what you tried to say? That's right, Sandeep. Okay. Okay. Thanks and all the best. Thank you. Thank you. The next question is from the line of Ashwin Mehta from Ambit Capital Private Limited. Please go ahead. Yeah, hi, thanks for the opportunity. Three questions. One, in terms of offshore utilizations, we are almost 14% below peak. So, as you go forward, you've, you've historically talked about that you'd want to keep the margins within a stable band, but there, is there a scope to kind of compensate through margins, in a period where the growth is lower? Ashwin, hi, Manish here. Good morning. You know, large part of the utilization is pressures and furlough in the quarter. And, you know, some companies choose to report furlough in price. We report it in utilization. So our math for utilization is build hours divided by available hours, and we don't reduce it from the available hours. So, from that point of view, some of this will get corrected as the furlough goes away. But having said that, is there an opportunity in utilization? Absolutely. And, we are currently focusing on ensuring proper pyramid rather than pushing the pedal on uplifting the utilization numbers. And, you know, as we go forward and as, you know, the volume picks up, you know, some of this will translate into tailwinds to the margin tomorrow. Okay, fair enough. The second one was on DXC, where we had signed an MRC, but over the last three quarters, we've seen declines here. So what's the outlook here in terms of coming back to that $14 million run rate that we've agreed to? So, Ashwin, you know, we are working with DXC, and we are making sure that we are part of their GTM. And, you know, we work together to figure out how we can be useful to them and how do we pick up good quality business. It's not necessary that every quarter we will meet the numbers and like we did last time. There are ways and means to kind of work together to figure out the commercials in a longer term basis. Half a million, or one million quarter-to-quarter movement, you know, at an overall level is not that significant that, you know, we should take measures which are not, what one would like to take. I would say that, our guidance on DXC, what it has been before, it's not a segment that, you know, we are investing behind. We are working to make sure that we leverage the relationship to the extent it is beneficial for both. And, seeing the experience that our end customers have, with many of whom we have been working for a very long period of time. Okay. And the last one, well, Nitin's addressed the questions on the top 10 clients, but if I look at your cohort, the top six to 10 clients, there was almost a 17% decline this quarter, and from a three-quarter perspective, almost a 40% decline. So, is it largely related to the regional bank issue and this quarter largely related to furloughs? Or, there are some of the other issues that you highlighted in terms of, in terms of client spend coming off, also affecting. So what's the outlook here? Is there any client-specific issue to follow up? I think it's primarily related to three factors. One is, I think if you look at the YoY number, there will be a pretty decent impact of mortgage declines. There is also an impact of regional bank issue on a YoY basis, even as well as on a sequential basis. And the remainder is really primarily driven by, I mean, besides furlough, the remainder is driven by the squeezing of the discretionary numbers, discretionary spend numbers. But again, as I said, there is no structural issue that we can see at this point in time, and we are at this point, taking a forward approach and saying every segment of category, top five, next five, next 10, and the 21 to 30, as well as the new client acquisition business should be contributing to growth. Some of these clients will take a little bit longer to turn around, depending on the segment of business they're operating in. Some of them we've already got signs of turnaround. Thanks, Nitin. All the best for the future. Thanks, Ashwin. The last question is from the line of Nitin Jain from Fairview Invest. Please go ahead. Yeah, thank you for the opportunity. So I have a couple of questions. The first one is around deal wins in AI. So, while the overall deal wins have increased 20% YoY, but after the first quarter, have you seen any pure AI-centric deal wins? And how has been the ramp-up in the AI-specific deals we have already won? So I think, Nitin, if you go back to what I called out earlier, almost every archetype and every solution is, is getting AI-enabled. I'll give you a very simple example: if you think about IT, Agile IT Operations, as we call out in our tribe, what that really is, is, is the run business. Production support, L1, L2, L0, L1, L2, service desk, customer experience, employee experience. Almost all of that has suddenly gotten a big boost because you now have the ability to, to embrace and adopt zero-touch, high-tech, you know, platforms. And we, we called out the AI award that we won. That is not in building a new data science-driven platform. That is actually in taking an age-old, you know, problem of incident resolution and applying machine learning and shift left to it. So the way I see it is, that it's highly unlikely that there will be any deal that will not have some element of adoption of one of these capabilities, as we actually go through current quarter or the next year. So to me, I think the this has become like the foundation of the business very, very quickly, and will actually even get more embedded into the business across the industry over the next, you know, couple of years. And if you don't embrace and adopt it, then we have serious issues from a relevance and a capability standpoint. Okay, great. Just to follow up on that, like, how has been the ramp-up in the deals that we have already won, AI-specific deals? I think we, as I mentioned, right, across the board, while there is still some backlog, some of those deals are very quick to ramp up because those were here and now, you know, needs for the customer. So I think nothing much else to call out for, besides what I already answered on the TCV consumption. Okay. The next question is on Silverline. So, the benefit to revenue this quarter seems lower than, you know, the quarterly run rate, it had when we acquired it. So what would be the reason behind it? So, Nitin, as Nitin Rakesh mentioned, you know, when he was talking about the acquisition, we acquired it primarily for capability and competence. And the run rate you are referring to is probably calculated based on the trailing twelve months numbers at the time of acquisition, which was not reflective of the run rate that was there when we acquired. So a combination of that and our choices of which customers we would prioritize and work with. You know, we believe that the number that we have got is what we had indicated when, before the quiet period happened. So, and, and in the interest of transparency, we wanted to make sure that it gets communicated, as a specific number. So we are not surprised by the number that, you know, we got with the Silverline acquisition. Okay. The guidance for the margin impact of this, Silverline acquisition was around 0.7%-0.8%, but it's come in higher than that. So if you could elaborate a little more on that, Manish? Thank you. Nitin, the guidance when we had the earnings call was that the current estimate was 0.7%-0.8%, which will get a kind of firmed up as the auditors go through the purchase price allocation. During the quarter, as the numbers got firmed up, the final impact of amortization and all the other charges came to 1.1%. So the guidance we are talking about was an indicative one, as I had mentioned when we discussed in the last earnings call. Okay, great. And one last question, if I may. So the finance costs, they seem to have jumped significantly from Q1. So from 240, we are somewhere around 500+. So, if you can, clarify this a bit? So for the purpose of acquisition, given there was an arbitrage and given we were able to benefit from the interest rate differential, we decided to borrow to fund the transaction. Also, the transaction happened outside the country and, you know, we wanted to leverage the banking benefits we could get by borrowing outside. We do have cash in the balance sheet. We could have chosen to fund it with that, but, you know, it was a treasury call, you know, in terms of what made more sense. Okay. So we see, we see this paring down going forward, right? Yes. Okay. Okay. Thank you so much. That's all for me. Thank you. With that, we hand over the call to Mr. Nitin Rakesh for closing comments. Thank you all for your interest in Mphasis and your questions, and I know we ran over time, so we appreciate your patience. And finally, I think as I mentioned, while the macro continues to remain uncertain, we are slowly and surely turning cautiously optimistic. We're pleased with our execution and the rigor that we showed over the last few months, and we hope to continue to build on that as we get through Q4. And we look forward to seeing you all on our next call. Thank you. Thank you. On behalf of Mphasis Limited, that concludes this conference. If you have any further questions, please reach out to Mphasis Investor Relations at investor.relations@mphasis.com. Thank you for joining us, and you may now disconnect.