Good morning, ladies and gentlemen, and thanks for joining the Mphasis Q1 FY 2025 earnings conference call. I am Dorvin, 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 will be referring to today. The same presentation is also available on the Mphasis website, www.mphasis.com, in the investor section on the financials and filings, as well as on both the BSE and NSE websites. Request you to 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, please signal an operator by pressing star and 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 risks and uncertainties. A detailed statement in this regard is available in the Q1 results release that was 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, Dorvin, and thanks, everyone, for joining us today. I appreciate your interest in Mphasis. I know it's early. I trust everyone's had a chance to review our earnings release documents, especially the IR presentation that I will refer to today. While there are some challenges, economies continue to be resilient, with customers still spending, and there's an increasing consensus around the soft landing. There is also a growing imperative for business, businesses to drive growth and streamline operations while making AI the driving force to automate repetitive tasks, improve decision-making processes, and create personalized customer experiences. All of these are expected to increase efficiency, reduce costs, and improve customer satisfaction. As we have been stating in the past few quarters, the market continues to be characterized by duality. From our interactions with customers, what we have seen so far, tech remains a top priority for our customers as they seek to operate amidst this duality in a cautiously optimistic environment. Investments are slowly inching up, especially in transformative technologies. GenAI is very much an imperative, both for short-term efficiency gains as well as for long-term business rearchitecture. Growth needs best-in-class technology landscapes with resilience and agility built in to escape limitations forced by legacy technology estates. There is a need to go beyond just cost takeouts. While undoubtedly efficiency and cost optimization plays are strong themes, organizations are looking to find short-term wins to fund long-term technological priorities. As we help our customers navigate this environment, we see the following imperatives: There is a strong focus on resilience and growth. We see this theme across sectors and geographies. While discretionary spends haven't changed vastly compared to the previous quarter, there has been a gradual pickup in client engagement. We called out the bottom towards the end of 2023, and in our last quarter, we said we are seeing some green shoots, and that trend continues. AI will transform experience and lead to efficiencies across enterprise customers, employees, and partners. The potential for AI and Gen AI is getting realized as we move from concept to application across multiple domains within an enterprise. This is now visible in the deal discussions and the pipeline buildup. Modernization and data continue to be the main anchors for our customers and resonate in deal activities as well. Savings-led transformation, a theme we launched earlier this year, and AI-led solutions are the way forward. Our customers are seeking to balance cost-saving priorities in the current macro environment with the imperative to stay tech forward and competitive. This is a step forward from zero-cost transformation or cost-led deals as clients look for realizing immediate value for enabling AI across the enterprise while adopting new ways of working in an AI-augmented fashion, such as Copilot or digital workers complementing human effort. We see this trend to be a forerunner of more outcome-based deals with a strong focus on ROI and value generation. At Mphasis, we were early to spot the AI opportunity over the last five years, set it starting with our machine learning and AI lab at NEXT Labs, as well as the unique market-leading presence of these algorithms on the hyperscaler marketplaces since 2018. If you recall, Mphasis was also one of the first to create an AI business unit called Mphasis.ai. Consequently, we've kept you updated regularly on our progress on the same, and I will add, expand on that today. We've been working with our customers to build a point of view, help them think through their AI journeys on productivity, customer experience, and modernization, and the like. We infused all our tribes and deal archetypes with AI and have been investing to stay ahead through prominent AI partnerships across hyperscalers and AI leaders. We are now entering the phase where platforms getting an adoption at scale and AI is beginning to seep into almost every solution. We see the AI impact on enterprise IT is huge, and modernization and efficiency are synchronous themes. AI is an end-to-end opportunity, which requires a forward-thinking, holistic approach requiring a business and a technology architecture redesign. Gen AI is delivering efficiency and enhanced customer and employee experiences. AI more broadly, including Gen AI, is being democratized rapidly and at scale. To extend our tech-led and account-led positioning and to align with these mega trends, we have continued to sharpen our solutions stack and are today announcing the launch of two market-leading platforms. We're launching an industry-first modernization platform called Mphasis NeoZeta, which is a platform for transforming legacy applications written in languages like COBOL, Natural, or Legacy Java. Using Gen AI, LLMs, and LAMs to reduce relearning time by over 50%. This is unlocking a large addressable market for applications that are either considered too complex and expensive for modernization. We're already live with this solution in some early beta plan engagements and expect our investments with partnerships like AWS GenAI Foundry to get rapidly boosted by these solutions. We are also launching Mphasis NeoCrux, an industry-leading platform designed to improve software engineering productivity by streamlining the software development lifecycle processes and integrating GenAI functionalities. This is the first such platform in the marketplace available as an integrated development environment extension or an IDE extension, and is in production at two live clients in our application service line. Additionally, NeoZeta Relearning Agent converses with NeoCrux agents to provide an even faster time to build next-gen solutions. We have seen that savings and transformation is an imperative for our customers, and further extends to Zero Cost Transformation that we've already implemented. Solutions like NeoZeta and NeoCrux will enable higher developer productivity and faster software velocity, which means clients achieve quicker transformations. So we are transforming a software engineering lifecycle while actually creating savings opportunity through higher dev productivity and reduction in dev cost. Last quarter, we announced a unique strategic partnership with AWS, bringing GenAI services for financial client services customers. Let me share with some progress reports with you on this. We are currently partnering with several clients in the Foundry for solutions such as KYC or Know Your Customer, Know Your Business for, for example, a large European bank. A GenAI-enabled intelligent document processing, i.e., IDP for insurance clients servicing FSA and HSA claims, as well as IDP solutions for mortgage clients. Live call analytics for a large global bank to provide sentiment analysis, compliance check, et cetera. GenAI for modernization for large financial institutions, where Mphasis will be leveraging our modernization platform, NeoCrux, on AWS, as mentioned earlier in my remarks. AI and developer efficiency for a large banking platform company where we were able to take the solution from the Foundry into a large deal in the first quarter of 2025. The last two solutions I just spoke about leverage both Mphasis NeoCrux and NeoZeta. AWS and Mphasis are also involved with clients in providing architecture reviews, solution support, and guidance in ensuring faster completion of POCs and accelerating GenAI adoption. Mphasis is also helping clients in Microsoft to improve adoption of the Microsoft Copilot stack, ensuring data governance and security, employee productivity, and extending functionality to third-party and custom integrations. We are also proud to share that Mphasis won the NASSCOM AI Gamechangers Awards 2023, 2024 in the healthcare pharma category for enterprise at the NASSCOM AI Conference earlier this week. We'll give you more details on the same in the coming days. We've rebuilt the pipeline to a strong level after healthy TCV closures in the previous year. Our overall pipeline is up 22% year-over-year and 17% sequentially. All pipeline metrics are green, with broad-based pickup in deals across sectors such as top 10 accounts, non-top 10 accounts, BFS, non-BFS, all geographies, as well as across large deals. We are pleased with the pipeline growth in the top 10 accounts, which has grown by 31% sequentially, pointing to a recovery in this segment in the quarters to come, as well as a non-BFS pipeline sequential growth of 25%. BFS pipeline is also up 7% QoQ after a large deal conversion in Q1 and up 15% year-over-year. Our proactive deal pipeline is strong, with about 78% of the pipeline from proactive pursuit. Heavy composition of large deals, deals in the pipeline underscores that digital transformation on accelerating adoption of AI continue to be core theme for our customers. Almost all our pipeline continues to be driven, archetype-led, and also well distributed across verticals in key themes such as data, modernization, Agile IT Ops, and platforms. One third of our pipeline is AI-led. We see opportunities in several of these archetypes, especially in areas such as Agile IT Ops, NextO ps, and data engineering and modernization. As I mentioned earlier, pipeline remains strong and conversion has been steady. We continue with the highest share of proactive deal wins in our TCV wins of $319 million in the first quarter of 2025. The quarter saw three large deals, including one large deal of over $100 million in our BFS vertical. A strong win rate with proactive pursuit continues, with more than 90% of the wins being proactive deals. These are broad-based TCV wins across verticals and across to the client pyramid, with several strategic customers as well as new customers. Significant TCV wins, TCV wins continue to be from our beyond top ten accounts and are well distributed between various service lines. 84% of our deal wins in the quarter were powered by next-gen technologies adoption. Conversion from TCV to revenue also continues to improve. We continue to be structurally forward-leaning, making investments where we expect demand. Coming to performance by segment, we continue to push for revenue growth, which is anchored in our strong client mining model and tech-led offerings. Our Q1 revenue came in at $410 million, a growth of 3.1% year-over-year in constant currency terms and a decline of 0.1% sequentially. Our direct business accounted for 96% of our overall revenue in the quarter. Our clients continue to look for best-in-breed solution providers for a combination of cost takeout and transformation programs, as I mentioned earlier. We expect the pace of revenue and deal conversion to continue to pick up, especially in transformative deals, through the remainder of the year. Our direct revenue for the quarter increased by 0.3% sequentially in constant currency terms and grew by 4% year-over-year in the Q1 FY 2025 quarter. For the quarter, our key geography, U.S., improved 0.2% sequentially and grew 3.5% in direct business year-over-year basis. India region grew its direct business at 10.4% on a YoY basis. We've been seeing good client wins and continue to see traction here. Our core service line, enterprise apps, that constitutes about 71% of our revenue. We grew that business 0.6% sequentially on a constant currency terms in the direct business. BPO segment declined by 2.1% sequentially, as certain projects were completed and new projects begin to ramp up, and grew it 3.1% on a YoY basis. We expect this segment to see stability ahead, and we are also seeing early signs of recovery in the mortgage business unit. Moving to our vertical performance. As guided in the previous call, we saw fairly secular growth across verticals. At an overall company level, BFS was up 1.1% sequentially in Q1. Specifically, in Direct ex-DR, BFS was up 0.9% sequentially. Overall, insurance grew 2.4% sequentially, TMT and logistics up by 0.6% and 0.2% respectively, driven by wins in recent quarters. Others segment declined sequentially after a good Q4. This was primarily led by project completions in the healthcare vertical after a strong enrollment season in Q4 2024. We see stability in this segment with new client and deal wins and the healthy pipeline across segments, including healthcare in the past few quarters. One of the large deal wins in Q1 is in the healthcare vertical and is led by a pro- platform-based transformation using the Javelina platform, implementing Agile IT Ops and everything as a platform drives. Performance in our direct business in these segments on a YoY basis was also healthy, with revenue ramp up in new customers across segments. While our top 10 accounts declined by 10.1% on year-over-year basis, mainly impacted by macro and the past few quarters, seasonality and regional banking issues in the preceding quarter also played a role. Our top 11 to 30 customers increased 10.2% on an LTM basis. Sequentially, on a quarter-on-quarter basis, top 10 accounts grew 1.2% and accounts 11 to 30 grew 3.4%. Clients six to 10 also sequentially grew at 1.6%. Our new client acquisition revenue continues to grow well, sustaining its strong growth trajectory at 22% year-over-year. Client mining remains steady QoQ and YOY. Market share with key clients continues to be stable, and we are well positioned with consolidation opportunities and share gains, driven primarily by savings led transformation features. This is particularly visible in the recovery growth in BFS in Q4 and Q1 2025 revenues, as well as the pipeline metrics I shared earlier across multiple segments. 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, our EBIT margin stood at 15%. Silverline acquisition costs impacted our margin by 0.8%. Reported operating profit for the quarter grew at 2.8% YOY and 1.1% sequentially. Gains in cash flow hedges increased margins in Q1 by 5 basis points. EPS at 21.4 for the quarter represents a growth of 2.8% sequentially. Cash flow generation at $53 million for the quarter was around 10% of net income. Cash flow of 68 days declined by two days over previous quarter and improved by 10 days over the previous year. In summary, this quarter we witnessed the fact that we continue to retain our focus on operational stability and building for future amidst the cautious optimism in the macro environment. I'll leave you with a few data points. We continue to focus on building for growth. We have had good progress in rebuilding and extending the pipeline. We have a well-diversified pipeline with non-BFS and top ten contributing very broadly. We recorded healthy TCV closures in Q1 at $390 million. Wins were broad-based across verticals, strategic customers, as well as some non-top ten accounts. We saw a second quarter of sequential growth in direct revenues and a portfolio well positioned for growth. We see sequential stability in all key verticals and geos, improving the trajectory of TCV revenue conversion. We recorded margin stability within the stated band, with a continued focus on productivity and operating levers, and posted consistent operating cash flow and improvement in DSOs. Coming to the outlook for Q2 and beyond, few key messages for the upcoming quarters as we look at driving steady and sustainable growth. Despite multiple challenges, tech spend continues to be seen as a strategic priority. General recovery is visible across client segments, especially in BFS, which is our anchor vertical. We see early signs of gradual recovery in the mortgage business segment, though we have not baked in major gains from this segment yet, in accordance with our philosophy of focusing on micro in an uncertain macro with respect to interest rates. We continue to expect to be above industry growth for the full year, gaining from the tech-led account focus strategy I talked about. We continue to target sustainable EBIT margin within the stated band of 14.6%-16%, and we will, we will maintain this while investing for growth. We'll focus on productivity, efficiencies, and operating leverage. We will continue to execute in areas of growth and invest across capabilities and verticals. On that note, operator, let's open the line for questions, please. Certainly, sir. 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 withdraw yourself from the question queue, you may press star and two. Participants are requested to please 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 from Investec. Please go ahead. Yeah. Hi, good morning. Thanks for the opportunity. Nitin, I had a couple of questions on the GenAI piece. So, I think we have done a fair bit of work there. So, from a cost savings perspective for the client, what has been your experience across application services, BPO and infra? The second is, do you think deal sizes led by GenAI can be large?... although it will start small with smaller applications and all that, do you think that the overall opportunity there can be reasonably large? And where are you seeing in which kind of modernization areas are you seeing a lot of traction? Finally, I think on the NeoCrux, just wanted your thoughts on how is this actually sold? Because, let's, there are two parts. So one is for an FPP or a T&M, is this sold as an additional? And how much of the productivity benefit on existing projects are we able to retain, and can that be retained longer term? And the last one is, I think as an industry, we have always talked about delinking revenue growth with head count growth. Do you think this time it's, it looks like a little more of a realistic thing over a four-year or five-year period? So those are the broad questions on GenAI. Thank you. So Nitin, that's quite an exhaustive and good list of questions. We can probably spend an hour talking about these, but I'll take a very quick stab and, you know, you will probably hear more on these over the next few quarters, especially as we plan to host the next Investor Day. But, you know, starting with the question around infusion of GenAI across service lines. I think the way to think about it is not so much service lines, but really to think about what service are you actually delivering. And that could be in applications or in infra. But for example, if you are in run the business, you're running production support, maintenance, service desk, remote infra, you're typically benchmarking your price to the customer to some widget or some outcome, and the outcome could be a ticket that you resolve or an incident that you handle. I think the opportunity and the threat is kind of hand in hand there, is that you will actually move away from pricing per widget to taking on a different outcome, and it could be availability or actually reduction in tickets, for example. So I think there is a potential for volume destruction in some of those service lines, because you don't really... You're eliminating people-based services that are capacity driven and are staffed based on a certain volume of tickets. Because if you eliminate half those tickets, you obviously don't need that many people, and that's kind of where you know, Agile IT Ops or remote infra is kind of headed. I think that has been well understood by many customers. They're obviously figuring out what's the best way to implement some of those solutions. What's the stack needed, what's the toolchain needed? You know, where do you go from, you know, reactive to predictive, preventive, self-healing? You know, think of this in a very simple term. Think of this as instead of people running software, it's software running software. And we will be needed as an industry to actually build that orchestration and the software layer, and then use that in an augmented manner with people to deliver that service. So I think that, that's kind of the way, again, at a very high level, without going into too much technical detail, that's the way to think about it. That is definitely showing up in the pipeline. You know, that is also opening up areas for us from an addressable market perspective, where we were not competitive before because we were not necessarily the lowest cost provider of per ticket pricing, because that was a scale and volume play. On your second question around NeoCrux and NeoZeta, these are definitely not meant to be starting small type of solutions. So if you think about what... You know, there's by some estimates, between 40%-50% of the applications are on cloud today. So the other part, you know, 50% are not. The reason they're not on the cloud is not because the business case doesn't stack up from data center to cloud, but the bottleneck or the stumbling block is the complexity of these applications, the mission-critical nature of these applications, and most importantly, the effort required to rearchitect and restack them for them to be truly cloud native. A lot of customers tried with the migration factory approach using containers or some other technology to actually rehost. That turned out to be very expensive, as they learned during 2021, 2022 timeframe, so they pulled back on that initiative. This is actually an attempt to unlock the ability to disentangle the complexity using GenAI. So in a way, we've flipped the tables, and we are using GenAI to relearn and extract rules. This has been an initiative that was underway for the last 18 months. We obviously ran it in alpha and beta mode. And the reason to launch it really is to unlock those large deals that are modernization-driven deals. And potentially, if you bundle the savings and transformation, then that gives you the opportunity to actually supersize the deals. That's probably one of the reasons why we are seeing a massive expansion in our TCV just on a quarter-over-quarter basis. In terms of your question around, you know, how do you sell the platform? I think, and potentially what that does to productivity and pricing and margins. Early days. Number one reason we're going down this road is because this is the best way for us to, you know, create value for customers. These are problems that need to be solved. There are potentially no straightforward solutions to some of these complex problems. Even on the engineering productivity side, SDLC transformation is not an easy task, especially because they've invested over the last 10 years in building their IDEs. Adoption of Copilot is a very complex job in, you know, alongside the whole DevOps pipeline, CI/CD automation. So I think our idea is to first find the best way to solve those problems and orchestrate the tech platforms that help them solve the problems. We are definitely, at this point in time, looking to just, you know, to create a bundled service offering versus anything that is standalone and separate. And absolutely, if we play this right, and I think there is an element of change management, both internally and externally, then there's an opportunity for us to get some non-linearity. So I tried to cover all the questions you asked me in a very quick manner. As I mentioned, these are all complex subjects that we can spend a lot more time on, but hopefully it gives you an idea. Right. Thank you. The next question is from the line of Sudheer Guntupalli from Kotak Mahindra Asset Management Company. Please go ahead. Hi, Nitin. Good evening. So for December and March quarters, it looks like we are seeing some green shoots and, building up on a steady recovery trajectory. However, this quarter performance, even in direct business, even in direct ex- DR, sort of questions that hypothesis, especially in the backdrop that, many of our peers reported very strong performance in BFSI, and we have a BFSI-heavy portfolio. Should we think of it as a mere, blip on a steady recovery path? Or is there any unanticipated headwind that we are facing again, which sort of, resets that recovery trajectory? Yeah, I think, you know, we did call a bottom in December. We delivered, 2%+ sequential growth across the business and in BFS last quarter. On top of that, we've delivered another 1.2-1.3% growth in BFS. So I think the way to think about it is we are right now in a phase of recovery. We had two big headwinds last year, BFS, and I'll come to it separately. BFS and mortgage and top accounts, like, kind of the within BFS, mortgage was another headwind for us for almost four quarters. I think the way to think about it is that the direction of travel is definitely in the right direction. We have seen sequential growth for two quarters in a row in the overall business, as well as BFS. I think the direct business performance in Q2 was impacted primarily by the project completions I talked about in the other segment within the healthcare vertical, which we do believe will come back to growth. All the other metrics around pipeline, TCV, large deals, are all fairly green. So I think with that backdrop, we do believe that if we continue to execute, you know, conversations to pipeline, pipeline to TCV, TCV to revenue, then I think we are on the right trajectory from an overall growth perspective. Yeah. So when you say above industry growth, post this quarter, the industry growth benchmark itself would have gone up, and with a comparatively modest June quarter, the ask rate for the subsequent three quarters to remain above industry growth also increases. So what gives you that confidence? Of course, deal TCV this quarter was good, but I think previous couple of quarters it was relatively modest. So what gives you confidence in that overall backdrop that you will still be above industry growth for the full year? I think fair question. But again, you know, if somebody declined 2.5% last quarter and grew 2% this quarter, you're kind of back to square one, right? So our guidance is not based on QoQ numbers. It's obviously based on CQGR and YoY and full year number. And much of the confidence is coming from visibility into a very short term, as well as the lead indicators around pipeline that we broke out quite well in detail. By the way, the other headwind that we had last year was top 10 accounts, which again, on an LTM basis, it looks more murky. And I've seen some commentary where there's confusion around what was the growth in top account, what was the growth in top five accounts, and what was the growth in next five accounts. I'm very happy to confirm to you that all the three metrics actually grew on a QoQ basis. Top account, top five, next five. Okay. So just as a follow-up, there are- Go ahead. Yeah, yeah. So just, since you are on the topic of top accounts, now. It is fair to assume that none of the top five, top 10 accounts have any continued challenges in the June quarter. On an LTM basis, though, it is conveying a different picture. I mean, it's hard for me to give you an individual account view, because in the end, you look at the cohort that we report, and we are reporting top 10. Within that, we are breaking out top five, next five. And I'm additionally confirming, because we break it out, that top account, top five accounts, next five accounts all grew sequentially in the June quarter. Thanks, Nitin. Do you expect any additional challenges on a go-forward basis in that segment? Answer is no. But that also doesn't mean that every account is going to grow at the same trajectory in the top 10. That's the reason I'm telling you, you know, it's a cohort, or a group, outlook versus an individual account outlook. Great, Nitin. Thank you so much. much. All the best. Thank you. The next question is from the line of Nitin Jain from Fairview Investments. Please go ahead. Yeah, thanks. So, I have an observation as well as a question. So, last quarter, you know, the commentary was, you know, we should see above industry average growth in FY 25, and which we have today as well. So, but the growth has been below industry average, and it has been lower than last quarter's sequential growth as well. So my question is, in the remaining three quarters, should we see growth that is significantly above industry average? So that, you know, by the end of the year, by FY 25, we end up falling in line with the guidance of above industry growth. So, Nitin, I think the way to think about it is that what we are basing our guidance on is based on the forward-looking guidance that the industry has published. If you look at the weighted average guidance from the industry, we are looking at a full year number and saying, you know, "What do we need to do to get to that number?" And at least our math suggests that that's a goal that we will continue to, you know, forecast. So, you know, whether it is, you know, X% in next quarter, Y% in third quarter, and Z% in the fourth quarter, I think that's a little bit more of a nuance that I cannot answer because I gave full year guidance, not a quarterly guidance. That also necessarily doesn't mean that every quarter will be the same, because remember that run rate of Q4 does help in the full year of FY 2025, which was a little bit different for peers versus us. Okay. Thank you. Thank you. Yeah. The next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead. Yeah, thanks for the opportunity. The first question is, let's say, is fair to say even the first half deal TCV of FY 2024 is not fully converted into revenue and could be the trigger going forward on that base, plus the new deals wins which are happening in the first quarter will also trigger and ramp up the growth in the coming quarters? I think it's both, to be honest, because we've been monetizing the $1.4 billion of deals from FY 2024. Not all of them are fully ramped up. As we mentioned, ramp ups were pretty slow in 2023. Pace has improved, but there is still more to come. Okay. Okay. And what are the hurdles which you have seen in terms of lower pace? Because some of the peers have also seen these hurdles, but that got behind starting from 1Q. So do we expect even the hurdles to convert into revenue for us will get over by Q2 or coming quarters? I think it's a gradual normalization phase that we are going through, to be honest. I don't think it's it's any one trigger event. We... You know, some deals have been fully ramped, some are still, not fully ramped, some have still more to go from the, the bases of the second year of the deal, because each deal, every deal doesn't, you know, flatline year-over-year, so there is a different number for the second year. So I So I think it's a, it's a mix of those, those nuances. But it's fair to say that out of the $1.4 billion, you know, there is a fair amount to be consumed in FY 2025. Okay. Second question in terms of margin, is there any one-offs in this quarter's margin, and how margin will shape up in the coming quarters? Because there could be wage hikes, quarter-after-quarter. So Sandeep, Manish here. You know, there are some one-time upsides, but not significant. We are. The primary movement that you see across segments on sales and G&A is because we had one times last quarter. We remain, there are quite a few tailwinds on the margin as we go forward, and revenue growth being the biggest one. And we expect the margin to, you know, remain in the band, and you know, we don't see any any challenges in maintaining the margins as we go forward. Okay, okay. Is it fair to assume, Manish, there would be an upward bias on the margin on quarter-after-quarter? So, you know, if the macro supports and, you know, we get the revenue uplift, there could be northward bias. However, you know, we are not calling that out, and which is why the guidance remains in that 14.6%-16%. Okay. Thanks and all the best. Thank you. The next question is from the line of Dipesh from Emkay Global. Please go ahead. Yeah. Thanks for the opportunity. First question is on the AI, I think partly you alluded, but just want to get more sense about, let's say, what would be the client expectation, as well as what we experience in our ongoing project? What kind of productive improvement we have witnessed across segment, if you can give some sense? So that is first question. Second question is on about mortgage. You indicated early signs of pickup. If you can give more detail about whether it is across segment in terms of home equity, origination, servicing, whichever bucket, and whether that pipeline is also seeing some kind of improvement, and whether it is volume-led kind of thing. If you can give some more detail. Last question is about if I look at your new gen deal, which you report as a percentage, and if one calculates, obviously last year, Q1 has some implication in some of these arithmetic, but on TTM basis, it is still down, and it is not showing any material acceleration. So if I look from incremental growth perspective, what gives you confidence about growth recovery? And related to that, that is about BFSI. Let's say last four a couple of quarters, we are seeing some green shoots. Are you confident about growth acceleration playing out on BFSI in coming quarters compared to where we are today? Thanks. Dipesh, I think the BFS question I answered. We called out for BFS to lead growth in December. I think we delivered two quarters of growth, and we still believe that it has the potential to continue to lead growth back, which is one of the reasons why, you know, we are relatively comfortable in talking about next couple of quarters purely from that perspective. In terms of your, you know, question around Gen AI and what level of productivity, I mean, the business case can be built with a 20, 25, 30% productivity, depending on what you're trying to optimize. If, you know, if you're trying to optimize a customer contact center operation by infusing tech and CCaaS modernization embedded with Gen AI, then, you know, of course, the business case is large. But realizing that is, you know, time-consuming and a serial effort. So we've seen uptick in many of those initiatives that is also leading to some client pipeline, both in existing clients as well as in new customers. I think it'll be slow and gradual, but those business cases are getting more solidified. We talked about Agile IT operations, where it is very much feasible to reduce 50% of the tickets, and hence you can see a 30% reduction in cost of ownership or the overall price and cost to the customer. So I think it is very use case, it's very business case dependent on the exact application of GenAI. A little bit more foundational work, you know, we need to get done before, you know, some very significant gains can be forecasted or baked in. While we are very forward-leaning on application of this tech, we are also not, you know, we are not—we are trying not to add a level of risk that may be unknown at this time. So, you know, in areas like modernization, I think there's a lot more confidence purely based on the relearn and the platform that we talked about. So I think it's a little bit more nuanced than in general what GenAI can deliver, because you would probably see a lot of analyst reports on the industry analysts talk about, you know, multiple different numbers, ranging from 20%-50% as well. But it is much more nuanced, depending on the type of activity you are in. Now, again, as I mentioned earlier, it is definitely an opportunity, but if you don't act well ahead and take a forward-leaning stance, then for example, if you don't transform what you deliver to the customer, then somebody else will. And hence we are taking a very forward-leaning stance in going to the customers proactively, in actually bundling these together with the current service lines. New gen deal. New gen deal wins typically are in the 75%-80% range. I think it's more a reflection of the overall TCV. I think what you're referring to on an LTM basis probably holds true on a, on a YoY basis. But, as we mentioned, I think the expectation is that we will continue to deliver healthy TCV for us to be able to... And then again, an early indication of that is the data points I've given to you around pipeline expansion. 54% is true. And in Q1, that, that number is 84%. I think, you know, you've already done the math on that. The final question was around mortgage. I think it is too early to call. You know, calling a bottom on the macro has been a very risky endeavor the last two years. We are seeing some uptick in volumes, mostly, you know, a combination of some origination volumes, as the rates have come up by about 50 basis points, but they're not meaningful enough. The spring home buying season was a very, dull season this year. But I think as the 30-year mortgage comes closer to 6% or 5.5%, that volume pickup will happen. Whether that happens in September or November, I don't really know, you know, because I don't have a good handle on what the Fed action will be to drive it. In expectation of a cut rate later this year, the ten-year has obviously come up by about 50 basis points. But that's the best indicator, you know, I have. Based on client conversations and expectations of volume ramp-ups, they're all waiting for some of these metrics to show up, and we do believe that we have visibility into those pipelines getting built up as soon as we hit some certain milestones that I talked about. Thank you. Thank you. The next question is from the line of Mohit Jain, from Anand Rathi. Please go ahead. Hi. Sir, first is on revenue growth for the quarter. I think last quarter we spoke about some impact from furloughs, which was continuing in Q4. So I was expecting little better growth, assuming that furloughs would have got over by now. So that was one. Was there any benefit during the quarter or not? And second was, from TCV standpoint, it appears that our revenue growth would still be slow on the direct business side. So your thoughts on the same? I think I kind of guided to you that furlough is not necessarily a reversible event. This is a, you know, what was, which was the false assumption that everybody made last quarter, that furlough is coming back, so growth coming back. Because furlough is an industry, you know, phenomena, and we didn't quite see that kind of growth in many, many peers, purely based on, you know, just furloughing away. So I think, you know, yes, there was some impact last quarter. I don't think, you know, Q1 or Q2 is a furlough discussion, unless something extraordinary happens, like it happened with high tech in 2022. But as such, I think most of this growth, we've broken it down by various parameters, by vertical, by geography, you know, by business line. So, I think on the overall, you know, numbers, obviously, the decline came through DXC. On a direct level, I think the decline came through the healthcare segment in the other vertical, and that's really what I can call out, in terms of what dampened the growth. But again, you know, we can control what we can, which is, you know, deal activity and pipeline and conversion, and that's what we are focused on, both at a pipeline level and a TCV to revenue level. Are you expecting a meaningful pickup in TCV, like, during the year? Or should we assume this is the new normal rate for us? Very hard for me to give you guidance on that. Again, I will guide you back to the lead indicators that we talked about in great, great detail in the presentation. YoY metrics, QoQ metrics, top ten metrics, BFS, non-BFS, you know, geography. I think Canada has actually shown us a lot of, you know, growth in both TCV and in pipeline. I think that's another way to think about where we're headed with it. Again, remember, we had a bumper Q1 last year in terms of TCV. It took us some time to build back up the deals through the various stages. You know, healthier conversion in Q1 is definitely a good sign for things to come. Okay, and one for Manish, sir. Our utilization went up sharply, but there was practically no benefit on the margin front. I think you spoke about no one-offs being there in Q1, so how should we see margin trajectory, given utilization is inching up quite sharply? ... So last quarter, we had called out, Mohit, that we had one time, and after that one time, we had delivered 14.9, because of operating leverage and utilization improvement and a little bit of benefit coming off of reduced exchange gain losses. You know, the margin has been at 15% and despite the last quarter, one time not being there. So a large part of what you see in this quarter is a sustainable margin versus a lot of one-times that we had in the previous quarters. So margin range does not change, because some of the operating parameters are turning favorable, like yield is coming back possibly, and then utilization is going up. So that does not move the margin range or the target margin, margin range in that sense? So, Mohit, the stated philosophy for us is invest for growth by maintaining margin in a narrow band. And, last quarter, we had called out that the range is 14.6%-16%, while we delivered 14.9% because we had some one-time upsides. You know, while we did not have those one-time upsides this quarter, we still delivered 15%. And, I think, you know, this is after us being able to make the investments that we wanted to make. So there is an upward trajectory, and, like Nitin called out in his speech, we had a 0.8% impact of Silverline acquisition. So if you combine the two, we are effectively at 15.8% versus the 15.5% that we were at, two quarters back. So, there is definitely an expansion in the margin that will happen. For it to completely reflect in reported numbers, the acquisition charges has to go away, and that should happen over a period of time. Traditionally, we are in the, we should expect it to be in the similar range going ahead. Uh- I think at early, at this time of the year, the range is, like, a little bit broader than, than you would like it to be, but we are keeping that flexibility primarily because we want to be able to take those calls on a quarter-by-quarter basis in terms of how much leverage to take back in and how much to plow back in the business. I think that's the reason why Manish is keeping that flexibility with a slightly broader range. Okay. All right, sir. Thank you. Thank you. Thank you. The next question is from the line of Manik Taneja from Axis Capital. Please go ahead. Thanks. Nitin, a couple of clarification questions. First of all, with it, should one be linking the decline on the healthcare side with the decline in BPO, given you spoke about some volumes on the healthcare enrollment cycle through the second half of the year? That's question number one. The second question was to simply get your sense on the onsite-offshore mix. While I do understand there is some element of the acquisitions that you've done over the course of last 12 months, but we've seen our onsite revenue mix go up meaningfully over the course of last 12 months. How should we be thinking? And especially in the backdrop of the fact that mortgage businesses continue to come off, et cetera, et cetera. So how should we be thinking about some of these internals? I think the answer to your first question around healthcare and BPS is yes. The second question was, Onsite-offshore. Onsite-offshore. I think again, remember we talked about, transaction Savings-led Transformation deals. I think, much like the digital projects or Agile dev projects, early onsite, early phase design, architecture, a lot of it is fairly onsite-centric. As we scale and ramp up teams to deploy, that will actually normalize as well. I don't think the onsite-offshore ratio is an objective function for us. It's really more an outcome of what's needed to be delivered. What's definitely an objective function is a profitable deal. So if I can generate a level of profitability and that business need, you know, needs to be onshore, we are very happy to support that. It's really what we call best shore. We have to support it from where it's needed to be supported, time zone coverage, nearshore, Canada, Costa Rica, Mexico, Poland, India. Within the U.S., we have locations as well in, you know, multiple locations. So I think it's not an objective function, it's more an outcome of the type of deals and the type of work that we do. And I think on the third question was on the mortgage side. We talked about the fact that it's hard for us to predict the macro. We are really taking a micro bottoms-up view on the accounts. What I can confirm is we've actually consolidated our wallet share and our market share because we want to make sure that as the market turns back, we are ready for, you know, gaining that share. We've also made some early investments in GenAI-led mortgage operations. We'll talk more about that in the coming quarters, but that's definitely an area where we think we can take a... We already have a market leading position as one of the providers for origination, refinance, home equity and diligence services, and we think we can enable that through GenAI. We'll probably unlock a lot bigger market, you know, that fits within the client's captive operations today. Sure. And just clarification, some of the nearshore delivery in terms of Mexico, in terms of Canada, does that get accounted as part of our onshore, proportion of business? Yes. Yes. Thank you, and wish you all the best. Offshore basically is only India. Offshore basically is only India in our disclosures. Okay, that's fine. Great. Thank you. Thank you. The next question is from the line of Girish Pai from BOB Capital Markets. Please go ahead. Yeah, thanks for the opportunity. Nitin, I just wanted to have your thoughts on the total incremental IT services spend of BFSI or non-BFSI customers, considering this significant discussion on productivity gains being passed back to customers. So in 2024, are you seeing the total IT services spend go up, or are you seeing them flat or going down? ... I think the total spend, what you mean is, total IT services, not just third party spend, because I know it's difficult for me to break down the third party spend. I think the total IT services spend projection for the year is about 2.5% at a global level. That definitely means that there will be, but that also means that there will be share of wallet gains and transfers, both, both in terms of market share and wallet share. Wallet share being within a customer, market share being if you have a market leading solution, for example, in modernization, then you should become, you know, you should be able to capture a large share of that addressable market as well. So I think there is both, I mean, if you look at most let us take a look at banks, which is, for us, it's our business. I don't think any bank, and I think a lot of you asked me this question last quarter, that most banks are showing increase in tech spends. Why is that not flowing to you? And I think the short answer is that starting that is slightly starting to open up and flow in as they look for partners to deploy those solutions that they have actually budgeted for. So I think it's a combination of what your portfolio is, how you're positioned with your tech stance, and what segments you play in. Okay. My second question around GCCs. Obviously, in the past, they've waxed and waned in terms of impact on the IT services industry outsourcing. Are you seeing any difference on the GCC side? Because they seem to be more critical to clients today than they were in the past. So is insourcing a more structural problem now compared to the past? I think, you know, this is a little bit like the debate of, return to office versus remote work. I think the right answer is hybrid. This approach, we have learned, not just how to survive with alongside, but how to thrive alongside. Because the reality is that, it's—they're here to stay. They are an integral part of every customer's operations, but if the only thing we are taking to the customer is offshore delivery capability, then we really don't have a business to defend as an industry. If what we are taking to them is more than just offshore delivery capability, then there is no threat to us. Okay. My last question is regarding the Others, which is your, I think, healthcare, manufacturing, and I think retail. It's declined about 8% if I look from an INR perspective. Why is that happening? Because I thought that those should be growth sectors, because those, I think those are verticals you're incubating. I addressed that. I mean, it was one of our faster growing segments, FY 2024. We had certain projects that got completed. Some of them were linked to the enrollment season in healthcare in Q4. That's really, I would say, kind of a outlier event that is causing that sharp decline you're seeing in on a QoQ number. Again, lead indicators, we closed one large deal in healthcare this quarter, and we have much more in our pipeline that we expect to close in Q2, Q3. So I think there are early signs and pipeline activity-wise, it's pretty stable. We have a very differentiated offering with a platform-based approach in healthcare payer market, and that definitely is seeing good adoption. Okay, thank you. Thank you. Participants who wish to ask questions may please press star and one at this time. We have the next question from the line of Ashwin Mehta from Ambit Capital Private Limited. Please go ahead. Yeah, hi. Thanks for the opportunity. So two questions. Manish, one question in terms of depreciation. We saw almost a 70% decline in this quarter. So what was this related to? And, is this the run rate that we are looking at going forward? Ashwin, last quarter, we had some of the amortizations accelerated as the previous acquisitions are now gone over. And we had called out that we had one-time profits and minuses. So, you know, if you see the adjustment is across sales expenses, G&A, and depreciation and amortization. We had called out that 18.7% EBITDA was not normal, and there was one-time upside there. We are now back to our 18, 18.1% EBITDA levels, which is what the normalized levels are. Okay, fair enough. So the second question was in terms of, like, if I look at your utilization, including and excluding trainees and offshore, it seems to have equalized. So given that you've had a 7% cut in headcount over the last two quarters, is it that the rationalization is happening more from a lower experience perspective? So from an operations perspective, Ashwin, what we do is, we look at the demand and the supply, and, obviously, you know, there is a certain amount of attrition that is voluntary, and there is a certain amount of attrition that is performance based. So a combination of all of that determines what the final, you know, outgo will be. It's not a concerted effort to only let go junior people. Means we would obviously make sure that the profile that is needed to service the demand is taken care of, and then there is investment in training, et cetera, so that we can fulfill the New Gen capabilities, et cetera. So, to your question, you know, the outgo may be, you know, junior or senior, but it is not at the cost of what we need for service. Yeah, I think the only way I, only way I would, you know, close it, Ashwin, on this topic is the pyramid is actually fairly healthy compared to our, our last three, four-year trends. And that's a very conscious effort to make sure that we have the right level of skilled folks across the pyramid. So the decision about reduction or addition is almost always based on right scale across the pyramid. Okay, fair enough. And just the last one: so given that we still have scope versus our peak in terms of utilization, do you think for our growth over the next three quarters, will we have to do any material hiring or, the bench itself is sufficient? I think we talked about it last quarter as well. We run a fairly—I mean, we try to run a fairly, you know, I wouldn't say just-in-time, but a fairly linked to pipeline, you know, market view facing supply-demand, you know, projection. And that utilization is actually not an objective function again, it's more an outcome of where we see demand and where we see supply. Is there opportunity for us to optimize utilization even more? The answer is yes, but that is going to depend on what we are seeing in terms of, you know, demand, supply trends in the pipeline as well. Okay. Thanks, Nitin, and all the best. Thank you. Thanks, Ashwin. Thank you. Ladies and gentlemen, we will now take the last question, which will be from the line of Nitin from Investec. Please go ahead. Yeah, hi. Thanks for the opportunity again. In the current quarter, I think, at least for me, the negative surprise was on the healthcare side, because of the project completion and we not being able to replenish that. From that perspective, do you think... Two questions. One is, do you see the deals that we have already done there immediately ramping up and we see no further headwinds from that particular segment? Is the first one. And second, are there any such large things from a project closure perspective that one should worry about near term, which is difficult to sort of replenish? Just two questions there. Yeah, thank you. Yeah. No, I think, you know, Nitin, despite the best efforts, sometimes, timing doesn't always work out in your favor, and this was one of those things. We do believe we will see sequential growth in the healthcare business, going forward, partly based on what we sold, partly based on what we will sell. And I think, to me, I think the effort will be to continue to focus on building, you know, longer term, more sustainable programs. But of course, sometimes you need to stand up what clients need for help, you know, on a short-term basis as well. So this was one of those cases. But broadly, I think the focus and the strategy is very clearly around platform-based services in the healthcare side. Sure. Perfect. Thank you so much, Nitin, and all the very best. Thank you. Thank you. I now hand the conference over to Mr. Nitin Rakesh for closing comments. Thank you, moderator. I think one last update I wanna give before I close. You know, as always, we hold fast to our commitment to CSR, including helping create a stronger, more inclusive and greener world. I'm happy to announce that Morgan Stanley Capital International, MSCI, has recognized these efforts and upgraded Mphasis' ESG rating from BB B to A. This upgrade is due to considerable improvements in parameters like corporate governance practices and data security programs, notably the adoption of encryption protocols. This significant improvement reflects Mphasis' commitment to sustainability and ethical business practices. You can find details of that on our website. Once again, guys, thank you for your continued interest in Mphasis and your questions, and we look forward to seeing you all on the next quarter call. 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. 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