Good morning, ladies and gentlemen, and thanks for joining the Mphasis Q2 FY 2025 E arnings Conference Call. I am Robin, your moderator for the day. We have with us today Mr. Nitin Rakesh, CEO of Mphasis; Mr. Aravind Viswanathan, CFO; and Mr. Vinay Kalingara, Head of Investor Relations. As a reminder, there is a webcast link in the call invite mail. 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 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 call, 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 certain risks and uncertainties. A detailed statement in this regard is available in the Q2 results release that was sent out to all of you earlier. I now hand the floor over to Mr. Nitin to begin the proceedings of this call. Thank you, and over to you, Nitin. Thank you, Robin, and thanks, everyone, for joining us today. I appreciate your interest in Mphasis. There's a lot going on all over the world. I thought I would begin by shedding light on a few key highlights from our vantage point and then discuss our industry. We'll start with the macro. In mid-September, the Fed commenced monetary policy easing with a fifty basis points cut. There seems to be an increasing consensus that the economy is heading towards a soft landing. That said, geopolitical tensions are still elevated, and the U.S. elections next month continue to create a climate of caution. As mentioned in our previous call, in this cautiously optimistic environment, tech spend is still viewed as a strategic priority. The gradual but steady recovery seen across our client segments continues, with client sentiment showing an uptick. Overall, we characterize the spending environment as moving steadily in the right direction. A major portion of this is driven by the increasing focus from enterprises to implement AI at scale. Across industries, businesses are aiming to maximize value from transformation while staying focused on costs and ROI from their investments. As we see an at-scale adoption of AI powering this transformation, we also see clients progressing towards becoming an AI-first business by rearchitecting to incorporate an AI-first stack, rethinking processes to incorporate AI-led services, and moving towards an operating model driven by AI-augmented services. In the long run, we believe this will lead to an AI-led economy that transforms how enterprises operate and thrive. In this era of AI, particularly GenAI, there's significant shift expected in how tech services and consequently value to clients is delivered. While we see that AI projects are moving from POC or pilots to broader implementations, we also see emergence of AI-led solutions employing digital workers or AI agents. These agentic AI systems function autonomously as collaborators capable of decision-making and actions. With little assistance from humans, these systems can evaluate situations and execute actions to meet predetermined objectives. As we discussed in our last call, this leads to a potential for disruption of services delivered in the traditional labor arbitrage model and a shift from model where people run software to software-running software. A shift from labor arbitrage to technology-led arbitrage. Our NeoZeta and NeoCrux platforms use the powerful combination of GenAI and agentic AI to augment human capabilities with intelligent AI agents. Software-led services like NeoZeta and NeoCrux completely change the economics of modernization costs. With the emerging economies of such tech arbitrage-led solutions, the business case of modernization becomes more attractive as it reduces the labor-intensive approach and removes the bubble cost. With this, we are able to help clients rapidly and efficiently progress on their modernization journey while delivering savings in the process. Our savings and transformation theme is principled on this approach. We are already able to deliver productivity through WorkFusion and other Neo platforms of AI agents acting independently on unrelated tasks or in concert like humans, with different subpopulations fine-tuned to excel at particular tasks. Some examples of this in deals include transforming business operations for a leading global asset management firm and a leading Canadian bank. Mphasis is delivering an AI-enabled platform implementation to transform operations, delivering 70% digital containment and improving agent productivity by 25%-30%, while also improving the quality of service. Expanding AI adoption and customer experience for a leading global pharma company, our services revolve around managing, supporting, and enhancing AI agents who answer external product queries from doctors, field reps, and patients, as well as internal queries for HR service desk, et cetera. Expanding AI adoption for developer productivity, the NeoCrux platform, built by Mphasis, has cut the manual effort by 50% for code quality while fixing security vulnerability issues for a multinational finance and insurance company. Our pipeline continues to reflect this expanding AI adoption, with 35% of the pipeline being AI-led. We see opportunities in several of these archetypes, especially in areas such as agile IT Ops, NextOps, and areas such as data engineering and modernization. Our overall pipeline is up 23% year- over- year. All pipeline metrics are green, with broad, broad-based pick-up in deals across sectors and geographies. Proactive deal pipeline is strong, with majority of our pipeline from proactive pursuits. Healthy composition of large deals in the pipeline also underscores that digital transformation and accelerating digital adoption continues to be core theme for our customers. Almost all the pipeline continues to be driven, Archetype- led, and is also well distributed across verticals and key themes such as data, modernization, cybersecurity, agile ops, and platforms. As I mentioned earlier, the pipeline remains strong even after three large deal wins in this quarter, and conversion has been steady in both our BFS and non-BFS pipeline continues to grow. Q2 saw a higher share of proactive deal wins as we stayed focused on deal making. TCV wins for the quarter was at $207 million. First half wins now at $526 million. Three large deals in second quarter and six large deals in the first half of the year. We had broad-based TCV wins across verticals, client pyramid and strategic customers. Conversion to revenue pace has also picked up through Q2, and we continue to be structurally forward-leaning, making investments where we expect demand. Looking at the quarterly view of performance by segment, we continue to push for revenue growth, which is anchored in our strong client mining model and tech-led offerings. Q2 FY 2025 revenue came in at $421 million, a growth of 2.4% sequentially in constant currency terms and 5.4% year over year. Direct business accounted for about 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. We expect the pace of revenue and deal conversion to continue to pick up through the year, propelled by our themes that we mentioned earlier today. Our Direct revenue for the quarter increased by 2.4% sequentially in CC terms, and grew by 6.2% YOY in second quarter FY 2025. For the quarter, our anchor geography, U.S., grew 2.4% sequentially and 8.4% in Direct YOY. EMEA region showed a sequential decline of 1.3% in constant currency terms, but we've been seeing good client wins and will continue to see traction here as we build the business through the remainder of the year. Our core service line, enterprise apps, constitutes about 71% of revenue, grows 2.2% sequentially on a constant currency basis in Direct apps. The BPS segment grew 3.5% sequentially and 2.6% on a YOY basis as projects continue to ramp up. We continue to see signs of recovery in our mortgage business. Moving to our vertical performance, as guided in the previous earnings call, we saw fairly secular growth across verticals. At an overall company level, BFS was up 3% sequentially in second quarter, and specifically in Direct BFS, up 3.3% sequentially. Overall, insurance grew 1.1% sequentially, and TMT led the growth with 5.4%, driven by wins in recent quarters. Others grew sequentially at 1.6%, and we see stability in this segment with new client and deal wins, with a healthy pipeline across segments, including in healthcare over the last few quarters. Performance in our direct business in these segments on a YOY basis is also healthy, with revenue ramp-up in new customers leading the way. Looking at our client pyramid, our top 10 accounts grew 2.1% sequentially, and our 11 to 30 accounts grew 11.2% sequentially. New client acquisition revenue continues to grow well, sustaining its strong growth trajectory at 14.3% year- over- year. Client mining stats remain fairly steady, both sequentially and YOY. Coming to our financial metrics, we deliver to our philosophy of maintaining margin in the stated band while making investments for growth. This quarter, EBIT margin expanded sequentially by 40 basis points to 15.4%. Reported operating profit for the quarter grew 6% sequentially and 7.4% YOY basis. Gains in cash flow hedges increased margins in Q2 by 20 basis points. Our EPS of 22.4 for this quarter represents a growth of 4.6% sequentially. Cash flow generation of $51 million for the quarter was at 100% on net income. DSO 73 days increased by 5 over previous quarter, mainly due to delayed collections in the last week of the quarter. In summary, this quarter, we've continued to retain our focus on execution and building for the future with AI adoption. I'll leave you with a few points. We've been executing with a focus on the micro amidst a busy macro environment. We continue to gain from our tech-led account focus strategy and seeing stability in key verticals and geos, while at the same time seeing green shoots trend across our portfolio. We enter the second half of the fiscal year with a strong pipeline, impacting consolidation opportunities and modernization deals driven by the savings-led transformation thesis. Focus on this thesis is helping create enterprise-wide adoption of AI across our customers. We also reported broad-based wins across verticals and client pyramid, and continued high share of proactive deal wins. We are seeing improved trajectory of TCV to revenue conversion and pace of ramp-ups, and steadily improving monetization of order book. We also saw steady growth across our verticals and client cohorts, with BFS and TMT driving the growth. We delivered expanded sequential growth in margin within the targeted band of 14.6%-16%. Coming to outlook, two key messages for the upcoming quarters as we look at driving steady and sustainable growth. We will be laser-focused on execution in an environment that is steadily moving in the right direction. However, we are focused still solely on the micro. We do expect Q3 to reflect normal seasonality and growth to still be led by the BFS vertical, as well as continued recovery in our mortgage business. We are maintaining a sustainable EBIT margin band of 14.6%-16%, while also maintaining our revenue guidance for the full year FY 2025. On that note, let's open it up for questions, moderator. Certainly, sir. Thank you very much. We will now begin the Q&A 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 now wait for a moment while the question queue assembles. The first question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Hi, good morning. Thanks for taking the question. So Nitin, this quarter has been pretty solid. I think it's been the best in the last ten quarters, and pretty much in line with what you suggested as a bottoming out, which we have seen. The only standout here is that if you look at the client bucket, it looks like there is one drop off. Is that if you could give some context to that, and in the context of things bottoming out, is there anything that worries you in terms of any broad specific or broad client specific issues on a going forward basis that you would really worry about? That's the question, from that perspective, and then I have one more. I'll get that. Sure. If you want to. So, sure, sure. Nitin, I think if you look at the, I think you're referring to the client bucket in the second category. I think the normal fluctuation quarter to quarter, nothing major to call out in that segment, because this is a trailing 12-month data. You know, we, I won't be surprised if that reverts back to where it, where it was, you know, a quarter ago, you know, in the, in the next quarter or two as well. I don't think there is any specific thing to call out on that front. I think in terms of your other, you know, your corollary question around anything else to call out from a Top Client segment, I think category of client-wise, if you look at the top 10 customers, they've grown sequentially by 2%. The next 20 have grown at 11% sequentially. I think our focus on driving growth through the next set of accounts, we called it the focused twenty accounts, is actually really paying off. You know, from a top line perspective, clients will go through their cycles and businesses of businesses and spends. I think our goal is to work with every client to ensure that they meet their goals as well as we meet ours, and we continue to, you know, retain, maintain, grow wallet share. Not all of them will grow at the same pace at the same time. But as a cohort, I think at this point, you know, we are fairly well positioned, and that's the reason, you know, we've reiterated our full year guidance. Got it. So, there is no specific worry on any large loss of share or any such thing on any of these platforms. So that's a fair understanding. If there will be, then we will call it out. I think at this point in time, as I said, right, we are. We don't know what will happen in the future, but at this point, we are very focused on executing to the focus that we've driven with both top ten as well as the, you know, focus twenty list of customers. The second thing I wanted to understand was around the mortgage business. Now, here, it's a little, there's some dichotomy here. So when interest rates have come down, you did see mortgage rates come up, and then it's risen back up quite a bit. So in that context, how are you seeing that business in terms of the shape of recovery, over the next maybe six to twelve months? How should we broadly think about it? Will it be, do you think that it'll be gradual, or do you think there'll be historical spikes? How should, how would you think about it broadly, directionally, at least? That's the second one. And finally, from a, a diligence perspective, we have historically been above $300 million, and this time we're slightly lower. Are you seeing any impact because of elections in terms of decision-making or anything getting pushed out? So those are the two questions. Sure. I think on the mortgage side, it is. I mean, I think the market got too excited and the ten-year declined by about eighty basis points or ninety basis points even before the first Fed cut happened. So Fed cut short-term rates by fifty basis points and the mortgage, and the thirty-year climbed by fifty basis points after that. So I think there is definitely two things have been established. One, the cycle has peaked and we are in a direction of travel that is easing off the monetary policy. Second thing that is established is there is a lot of uncertainty around the place of that direction. I think we've seen some uptick in mortgage business in Q2. I think we called for it. We also cautioned that we don't expect a rapid recovery. That was not the base case, and that's how it's played out. And if you look at the lines of business in mortgage, I think the first expected recovery was going to be in the diligence business, and that's where it happened in Q2. Volume uptick is barely, you know, noticeable. I think there is some uptick in volume, but since, especially in the last thirty days, since the, the interest rate cut, I think there's a lot of pickup in conversation with customers around the expected pickup in refi volume in calendar Q1. So I think we do expect that things will gradually improve, but I don't think we're expecting a rapid recovery until the rates fall a lot more. But that definitely means that there will be some tailwind in that, in that business. And then go back to previous, you know, levels? Answer is absolutely yes. When it will go back, it all depends on how quickly the rates recover, because remember, the mortgage business, real estate market, housing is a big portion of the economy. It will have to unlock at some point. I think we've seen the first phase of unlocking with the diligence business and the secondary market volume of MBS securities. I think we'll see more activity on refi and origination because there is a pent-up demand there. On your second question around TCV and the numbers, I think two trends have emerged in the pipeline. First, there are still a lot of transformation deals. I think the sales cycle there is a little bit elongated on two counts. One, clients are still fairly ROI focused. You know, is this program still delivering the ROI? What's the timeline expected on the ROI? Two, is there an element of AI infusion, which basically means that more stakeholders get involved and the cycles become longer. So that's definitely at play. We definitely saw some decisions getting pushed into Q3. You know, obviously, we are focused on executing. That's the reason pipeline is actually up 23% YOY. It's actually up sequentially as well in low single digits. So I think pipeline's strong. Decision-making on transformation deals with, you know, additional element of AI infusion definitely creating a little bit of elongation on the decision cycles. Second trend that we've seen emerge in the last three months, and I think this is something that was called out by ISG yesterday in their quarterly release, is that there is an uptick in IT operations deals, and that is led predominantly by a desire by clients. Some of these deals in our pipeline are actually out-of-cycle deals. They were not due for renewal. You know, we've seen another provider was running app maintenance, we were doing app dev, IT Ops, service desk. There was a bunch of deals like that, where the desire from the client is, "Maybe I need to actually see if the AIOps proposition gives me an exponential savings opportunity of 30%-40%, and hence I can redeploy those savings into my, you know, new initiatives around AI." So I think you will see an emergence of... I think it's still early days there, but that's definitely causing an uptick in deal activity, especially in IT Ops, infra and applications, you know, management deals. So I think that is creating an interesting opportunity for us, because that's a segment of the market where our right to win was low, given that there was always a scale play with shared services models and widespread global distribution of talent. If you're dealing with pure people-based services, I think players like us have a pretty strong right to win in that business as well. So I think those are the two big trends to call out on the pipeline and the TCV. Super. Thank you so much, Nitin. Very helpful, very clear. Thanks again. All the very best. Thanks. Thank you. The next question is from the line of Sudheer from Kotak Mahindra. Please go ahead. Yeah, thanks. Hi, Nitin, congrats on a good quarter. So just double-clicking on some of the questions asked by the previous participant. So logistics and transportation this quarter, I think there is a bit of a decline, while most other segments have seen a good recovery. So any specific thing to call out, especially around the top accounts within this vertical, logistics and transportation? So Sudheer, there's a marginal decline. I think it's $1 million that's creating. I think that's the only red on that chart. As I mentioned earlier, I think clients will go through their own spend cycles and business cycles. We just have to stay focused on executing and staying very close to where we can add value. There will be, you know, potentially, puts and takes. It's not a one client vertical, so I would stay very focused on executing to the cohort of clients there between logistics, airlines, railroads, and transportation. Nothing else to call out at this point. Okay, Nitin. So just reconfirming, there is no a major loss of wallet share or loss of client in this segment either, right? Nothing to report at this point, Sudheer. Okay, thanks, Nitin. Thank you so much. That's it from my side. Thank you. The next question is from the line of Vibhor Singhal from Nuvama Equities. Please go ahead. Hi. Good morning, everyone. Thanks for taking my question, and congrats, Nitin, on solid execution in this quarter. So Nitin, my two questions from my side. One is on the banking segment. We saw good recovery in this quarter, and I want to talk about banking segment, excluding the mortgage part. What is the traction that we are seeing in that segment, given that we've had the first rate cut, the results that have been declared by the clients like Wells Fargo and other players as well? Over the past week or so, they have been quite upbeat about the prospects, and more and more things are coming about the possible soft landing in the U.S. What are the client conversations in the BFS segment around, and how do you see this vertical playing out over the next one to one and a half years? I think it's. Firstly, thank you for the execution comment. It's definitely taken a lot of effort to get the business to where it is, especially with all the macro action that I talked about. If you look at BFS, we actually called for bottoming in BFS business about nine months ago, in the December quarters. We saw, you know, uptick in BFS in the last two quarters, and this quarter, obviously, it's picked up pace, aided by both the non-mortgage and of course, a little bit of the mortgage side also helped this quarter, but majority of the growth came outside of the mortgage business in Q2. Three things to think about. Firstly, I think the reason we were able to call a bottom in that business nine months ago was purely based on uptick in small deal volume, in-year spend, ACV versus TCV, you know, uptick, and we—I think we called that six months ago, and we are seeing some of that even in this quarter, both in terms of TCV, and more importantly, the revenue conversion has actually picked up as well. So even if a deal was sold 12 months ago, 18 months ago, consumption definitely has picked up in the last, three to six months. And that's good news, and that's what's helping us deliver the new growth in the very short term. Then if you look at segments of BFS, I think we, we said consumer banking was pretty, you know, stable. You know, the NII expansion helped a lot, but there were parts of the business that were rather market linked. You know, wealth management was a little bit stressed for a period of time because of high interest rates, and the RIA platforms were struggling to make money. And then we obviously looked at the CIB segment, which is a corporate investment banking segment, was very stressed until about three or six months ago. We've seen gradual reopening of capital markets, not quite on the IPO side yet, but definitely on the secondary side, M&A activity, trading activity, and that's what's reflecting in almost every bank earnings in the last one week as well. So I think banks have at least called for victory in terms of soft landing. Obviously, there is still not a lot of consensus around it, even though increasingly people are, you know, assuming that that's where we are headed. And that actually bodes well for the next, at least two to three quarters. Some issues still have to be worked through. Pace of activity, pace of recovery in interest rate decline, I think all of that will go back into this element. Good news is, because of soft landing, the health of consumer and the losses on consumer credit are going to be well contained. We are also seeing increased spend coming out of RegTech. You know, KYC, AML, FinC rime, continues to get a lot of, you know, news flow and a lot of investment from banks, given just the amount of work that they have to do to keep up with the sanctions and the activity on that front as well. So I think overall, Fed dots definitely is a trend. Three quarters of growth in BFS sequentially, obviously is starting to show up in YOY as well, and we do expect that to continue. Obviously, you have to keep in mind the seasonality issue for Q3, but in general, I don't think that. I think that trend is well established on the BFS front. On the insurance side, I think for us it's a little bit more of a micro bottom-up play. I'm happy it grew 9% YOY this quarter. We've seen sequential growth in that as well, and I think deal activity there is pretty good for us to continue to look for growth in the coming quarters as well. Got it, got it. Thank you so much, that was really helpful. My next question moves on, your opening commentary, in which you mentioned about the GenAI adoption and AI-led pipeline, and specifically on the NeoZeta platform that we have. So I think in our last discussion, we discussed a lot about how legacy code modernization is an opportunity that we are kind of approaching via these platforms. So, what is - I mean, what are you, I mean, again, what are you talking, I mean, basically speaking about in terms of client conversations? Are the clients opening up to the legacy code modernization part? How are, I mean, what is the kind of projects? I mean, is there any uptick in projects going from POC stage to live stage? Just some color on that would be really useful. I think the short answer is yes. That's why 35% of the pipeline right now, and the pipeline is sitting at a record number. 35% of the pipeline is AI-led. A lot of that is a combination of modernization deals. Also, a lot of it is a combination of infusing NeoZeta and NeoCrux and ADM construct, for example. Because what NeoZeta is doing is actually helping map the entire application landscape and convert that into a knowledge graph that actually becomes the foundation for your applications on a go-forward basis. And that becomes a very powerful nerve center or a dashboard for an enterprise to then maintain applications, enhance them, test them. When they onboard a new customer, what changes need to be done, simulate, you know, the test points, simulate test cases, create user journeys. So I think this is early, early days yet, but good initial adoption in the pipeline, good initial alpha and beta customers. We've infused that into the AWS Foundry as well already. So I think there is, as I mentioned, in the early days, adoption at scale is definitely on every enterprise's mind, and we are trying to see what's the best role we can play and take a forward-leaning approach on becoming a partner of choice for AI adoption at scale. Something we saw actually on the cloud side as well over the last five years. I think it's a similar trajectory, but a faster adoption cycle in my view. Got it, got it. Just one last question from my side on a couple of housekeeping questions kind of thing. Our DSOs jumped sharply, Q1 from 68 to 73 days, and our cash has also come down from June to second quarter. Any color on that would be really helpful. Yeah. So the cash has come down largely due to two reasons, right? We made a dividend payout of about $124 million, and we also repaid some of the loan we had taken for one of our acquisitions of about $67 million. So if you look at cash flow generated from business, the operating cash flow is about $50 million, which is 100% of PAT. So to that extent, you know, I wouldn't say cash has come down. Yes, you know, the cash flow generation was a little lower, but, you know, it's just a good benchmark to start from. DSO went up a little bit in this quarter, marginally up YOY, you know, up by about 5 days sequentially, largely because some of the collections slipped through to the first week of October. So I do think we will catch on that in the coming quarter. Nothing to worry about that. It's just a time, time cycle thing. We should recover it in the next quarter. They're generating 100% of PAT, right? So it's... That can't be a concern, right? Yeah. I think there's nothing to call out specifically on that issue. Sure. Great. Thank you so much. Thanks, thanks, guys. Thanks for taking my questions. I appreciate it. Thank you. Thank you. The next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead. ... Yeah, thanks. Thanks for the opportunity, and congrats on a good execution. Just wanted to understand, Nitin, some of your large peers are calling out increasing demand through cost takeout as well as vendor consolidation. So are we also witnessing such things, especially on vendor consolidation? And are we worried about the same, or are we looking to capture increasing wallet share through vendor consolidation in some of your top accounts as well as in new accounts from other vendors? So, Sandeep, I'll answer it in two ways. I mean, I'm always worried about vendor consolidation in my top accounts, and hence we have to always be very, very focused on protecting our wallet share. We have a protect the core motion in every account. And there always will be puts and takes depending on the cycle of a customer, their spend pattern, what they're going through, and so on and so forth. But broadly, the focus is to make sure that in our top accounts, we constantly gain wallet share and stay very vigilant. If you then look at. And obviously, there are, as I said, right, top 10 cohort grew 2%, pretty much in line with the company. But the next 20 grew at 11%, and a large portion of that growth is a combination of two things. One, we are using some of our tech-led offerings to get a foot in the door, tip of the spear, and then very quickly we are expanding our wallet share in those accounts. Obviously, consolidating either a smaller player or in some cases, even taking share from a larger player. Because a lot of clients are at a point where they're always looking for a challenger mindset. You know, one of our top thirty clients told us that they have too many champions, and they're looking for a challenger, and that's part of the reason why we were able to actually consolidate our position and actually grow that account pretty rapidly in the last twelve months. So that's very much part of the next, you know, focus twenty account growth. Even within banking, for example, we have a number of customers where we've only acquired them in the last three years. We've talked about it quite often in the last, you know, couple of years. We went from having five out of the top 10 banks to actually having 15 out of the top 15 banks in our client portfolio. A lot of that really is when, is wallet share gain, because it's not like, you know, they're spending a lot of net new money. Yes, spends are going up, but a lot of that is coming from us gaining share from incumbents or, you know, small or big. So I think consolidation will always be a play. It becomes an even bigger play at times of pivot. We've seen that a few years ago, 2020, 2021. We'll probably see some of that play out again in 2025, 2026, as I think I mentioned this when I talked about the trend that we are seeing in the pipeline where some clients are already starting to look for AI-led IT operations. That will actually create another opportunity for players like us to create new wallet share through consolidation of those service types as well. So it's not just a cost play, it's almost always a proportion, and can you deliver a service better? Can you deliver it in a different way? Can you deliver it in a more tech-led way? Okay. Okay, thanks. And just, the commentary about the deal pipeline across key markets, key verticals, has been bullish in the one Q call as well as bullish in the two Q call. So do you expect the TCV win, which has been slightly sluggish and tapered in the two Q versus one Q, can pick up in three Q and four Q? I mean, I would love to tell you, yes. The reality is, it all depends on conversion of some of the large deals. Do we have the deals in the pipe to get to that trajectory? Answer is yes. But we are also very, very practically focused on ensuring we take every deal. I mean, a $500,000 deal that can be consumed within the quarter is actually very valuable, as is a $100 million deal that will be consumed over three years or five years. So I think it's a combination. It is, I did mention that some of these deals did slip into Q3 purely because the client scrutiny on ROI and AI infusion is a little bit high right now. There's a number of stakeholders you have to deal with have increased. I mean, there used to be a CIO, then there was a CDO, then there was a, you know, chief AI officer now. So I think there's the stakeholder management on the client side is going through a little bit of a transition and change, and that's leading to a little bit elongation in cycles, especially around transformation. So I think as we convert those, definitely opportunity exists for us to have a pretty robust set of wins in the second half. Okay. And in your opening remarks, you call out furloughs to be normal. So to achieve our industry leading growth, the growth momentum needs to be maintained in three Q, four Q. So are you worried that the seasonality may impact the growth in three Q, four Q? I think we modeled it. I said we will follow the normal seasonal patterns. We modeled that. We still have, obviously, 10 weeks to go in this quarter to manage it, so do all of our peers, and then I think we have enough of a visibility into the remainder of the year to maintain where we are in terms of our FY 2025 guide. And the last question, how do you see margin outlook in the second half? Are we also still believe that the margin will have an upward bias in Q3, Q4, to Q2 levels? No. So I think we've been talking about our range between 14.6% to 16%. We delivered 15.4%. If you look at the upward bias, kind of happened already from Q1 to Q2, right? As we improved about 40 basis points in the quarter. So I think we will stick to that range, and I think we are quite confident that we'll operate. I mean, obviously, there are puts and takes and seasonalities around, you know, Q3 being historically weaker than Q2, but I think we are very confident to be in the range that we have kind of talked about. Okay. Thanks and all the best. Thank you. The next question is from the line of Nitin Jain, from Fairview Investments Private Limited. Please go ahead. ... Yeah, thank you for the opportunity. So I have two questions. First one is on the TCV. The deal wins, you know, they have stayed consistently between $200-$250 million for the last, I think, five or six quarters. Although you have indicated that, you know, you are seeing better conversion from TCV to revenue, but with the Fed going through an interest rate cut scenario, do you think, do you believe this will pick up going further? And the second question is, you know, you spoke about sequential growth, so I just want to double-click on that. How should we read into this quarter's sequential growth? You know, given that last quarter we had seen a revenue decline. So, if you can elaborate. Thank you. Nitin, I don't think we had a revenue decline last quarter. I think we had about 0.5% in, you know, sequential growth in Q1, about around 2% in Q4, and then this is 2.4%. It's probably one of the better ones in the last few quarters. I think we had talked about executing the order book, consuming the sold book of business, you know, consuming the in-year short burst deals that we've been talking about for the last six months, and that's what's leading to the, you know, Q2 growth that you've seen that is pretty broad-based across verticals. As we look at, you know, sequential growth on a Q3, Q4 basis, it's fair to assume that Q4 will be better than Q3. I just leave it at that, and then, you know, we can do the modeling on what that will mean for us to continue to deliver to the guide that we've given. Not to forget that we've seen, you know, consensus uptick already in the last, you know, 60 days or so, purely based on the industry outlook as well. On TCV, I think we answered that in detail in the previous question as well, that the deal-making pace is definitely elongated cycle, purely based on multiple stakeholders and scrutiny, additional scrutiny, even from sectors that are now starting to open up. But we are compensating for that through, you know, as I mentioned, the assumption of TCV that was already previously sold, especially, you know, in some of our top accounts, for example, we don't really have to go sign a new SOW because we have unconsumed, you know, sort of, you know, spends that we haven't fully consumed over the last 12, 18 months. And similarly, you know, as we convert some of these larger deals, that can change very quickly with one or two deals coming in into closure. Just like we had a $170 million deal last quarter, and even this quarter, we have 80-plus million dollar deal in one of our charts in TMT vertical. So I think it's a... The lumpy nature of large deals will continue to influence the overall TCV number metric, but we are baking that into our current order book and then kind of looking at what Q3 and Q4 look like. Sounds good. Thank you. 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. First, about if I look at BFS growth and adjusting for top line, it seems it masks growth this measure of the growth this quarter. So if you can provide some color, it seems it is not more participating kind of growth. So if you can point out, call out some more details around it. Second question is about the integrated system transition, which you announced framework agreement. Whether the strategic customer is existing customer or it is a new customer, and if you can provide more detail about vertical and overall thought process around the transaction. Last question is about productivity improvement, which you highlighted in the presentation from AI-led kind of team. Now, it is a fairly high number, 30% - 70%. Do you expect it to deflationary pressure or medium-term growth trajectory for sector as a whole? Thank you. I think the first question-answer is pretty straightforward. You are not able to see that growth broad-basing because you're looking at LTM data, and that's why if you look at the QoQ data, it's 1.2%, 2.2%, 2.1% QoQ top ten and 11.2%, 11- 30, you know, growth sequential. By definition, that means that it's not just one or two accounts, it's actually a combination of accounts, especially in the next twenty layer that is driving this growth. Especially in BFS, we've seen that play out actually for us. So I think you know, that's a simple data point I will guide you to. It's mentioned in the deck as well. Second, your EDC transaction is a vendor consolidation transaction where we've taken out an existing vendor at an existing customer in the TMT vertical, and the deal has been structured on a long-term basis. And the accounting-wise, it's probably showing up in the footnotes because that's how the best way to account for the deal is. But it's really a large deal sold on a vendor consolidation basis in an existing customer. That is a relatively new customer, but has grown rapidly in the last four quarters. And the third one around deflationary impact of productivity. I think it will definitely have an impact, especially for service companies that have a large book of operations businesses, especially around IT Ops, infra, service desk, and some elements of you know, contact center, customer service. Those are the early hotspots when it comes to applying AI productivity, and I think I mentioned that in the comment around deal pipeline and the shape of that pipeline as well. So, for players like us, we see that as a right to win in an area where we were not very competitive in the you know earlier. We didn't really have a right to win in a large- you know five-year AMS deal that was purely based on a per-ticket price. Now we think we have a right to win because we can really take a 50% effort reduction point of view on it or through the per-ticket cost price point of view on it. So I think there will be a redistribution of wallet share for those who get it right, and there'll definitely be pain for those who are already sitting on a big book of business that is susceptible to challenging through this tech-led disruption. Understood. Just on the first question, now, if I look, let's say, BFS added $7 million, top client added $6 million, and that was, I was referring to, from sequential perspective. But broadly, you are indicating, growth is- That's an LTM- And maybe this quarter might be. No, no, Dipesh, that's an LTM. You look at the LTM data, no? Because I don't think, I don't know if that's... I'm reading it right, but maybe, Aravind, you can check it. So, Dipesh, what is the hypothesis that- Seven million added in top account. Okay. But that's an LTM data. Which is- Mm, so- So the concern is what? It's not broad-based. It is the each quarter number only. Both numbers are for the quarter one and quarter two, I am comparing. So that is the QoQ numbers. It is not TTM, but maybe I can take it up then. Sure. Got it. Sure. Thank you. The next question is from the line of Manik Taneja from Axis Capital. Please go ahead. Hi, thank you for the opportunity. I actually wanted to pick your brains around, around the deal number. Do you think, given the current backdrop where you have spoken about some of the play through these, emerging in terms of smaller transactions, and thereby we continue to see the large TCV to be volatile while revenue growth continues to improve? That's question number one. The second question was with regards to the on-site offshore revenue mix, both for us and the rest for the industry. Over the course of last two, three years, more specifically for the industry, we have seen this lately move towards higher India revenue. Do you think now with a lot of focus on AI-related engagements and their projects are starting small, we could see a reversal on that trend for the, for the industry as well? I think, I'll take the second one first. I mean, at least for us, on-site, offshore is not an objective function. We don't manage the business with on-site or offshore. We manage the business with Best Shore. Wherever we need people to service that customer at the right profitability of the business, we will actually service it from that geography. Also, for us, there is a little bit, and we've discussed this in the past, anything that is not in India, sits in on-site for us. So even if I add people in Mexico, Costa Rica, Taiwan or Canada, or Dallas or Florida, that will all show up in on-site. And hence, I think some of that nearshoring split is not showing up, which I think we should correct over the next, you know, couple of quarters, we'll start. We'll see if we can report out the nearshore segment separately. I don't think that's a trend. Again, it's a question of how some of these deals get structured. If I create an AIOps app management deal, and that requires 100 people, you know, traditional model was 80 of them should be offshore, 20 of them should be onshore. We may get to a point where I need 60 people, 30 onshore, 30 offshore, and but the deal will actually make a lot more sense. So I think it all depends on how this evolves. I think the labor hour model will definitely be. Well, it will still be relevant because that's not. We are not shifting away from that model, but I don't think it's going to be an objective function. I think it'll be more, an outcome of what's the best place to deliver the services from. But broadly, if you look at headcount mix, I think it's not changed that dramatically for us or for the industry, and I don't think that will change, going forward. But the direct linkage from headcount to revenue will actually definitely be a focus area for most companies in the industry. On your first question around TCV, shape of TCV and revenue growth, I think there will potentially, depending on size and nature of deals, it is likely that you may, you may see TCV growth that may not seem very large, but you may still see revenue growth purely based on the fact that if I'm able to consume either order book until it lasts or short-duration deals, then I'll be able to show growth. But reality is, to grow sustainably over the next 12-18 months, we have to obviously, you know, convert some of the large deals in the pipeline as well, and that's the focus right now. Sure. And if I can pause this further on one particular aspect. This quarter's presentation once again focuses or highlights the account-focused selling strategy. Is this a return back to our original strategy? Because in between, we were talking more about a vertical-oriented approach that the account-based selling that we have has yielded very good results for us through the last few years. I think what we've tried to do is to balance the account-based focus with the vertical cohort mindset. So it's not that we went away from being account-focused. We actually created a combination of accounts that sat in the same vertical to create a cluster approach or an account cohort approach and create scalability, fungibility, and repeatability across those solutions. So but the account-based focus never really went away. That was almost always, you know, the pivotal focus for us was to create n equals one, which is every account is a unit of P&L, and that's when it gets the most attention. And that's what really worked for us in super scaling and supersizing these accounts as well. But... attempt has been from a scalability and a repeatability perspective to create these account cohorts or clusters that we can then manage as P&Ls. Sure. Thank you. Now we look to the future. Thank you. Thank you. The next question comes from the line of Ayush from B&K Securities. Please go ahead. Hi, good morning. Actually, you're not very clearly audible. If you're on a- Yeah. Please pick up the handset. Go ahead. Yeah. Is it audible now? Yes. Yeah. We just wanted to understand a couple of things. On the top account side, are we seeing any kind of a pressure from the top account? Because if we see the, you know, trajectory in this quarter, definitely it has grown, but the last few quarters have been a bit of a pain on that side. Can we also understand that logistics will be, you know, will be on the growth trajectory going forward? The second question is that this is the very first quarter that we have seen, you know, broad-based growth, but how confident are you that, you know, that this broad-based growth would be kind of getting sustained for the next, couple of quarters or going forward for the full year? Third question is on margins. So this quarter, definitely we have, you know, given improvement in margins, but we have the wage cycle that is being divided across the period. So is it have we linked to that we haven't given the wage hike in this quarter that has led to the margin expansion? Because if I see, the employment expenses have come down sharply on the quarter-on-quarter basis as a percentage of revenue. So these are the three questions. So I'll... I think I addressed the first two questions already, but I'll reiterate. We said we modeled our sequential growth based on which we are guiding at least for FY twenty-five to be where it is. We do believe Q3 will be seasonally weak, but we do believe that we have the ability to continue to deliver to what the full year should look like. And that, as I said, right, three quarters of sequential growth, we do believe that we bottomed the business in December, and we've continued to execute on the order book, the pipeline, and the deal business. On your specific questions around logistics, again, as I said, right, the view right now is baked into what we believe is likely to play out. I think there is not much delta between Q2, Q1 and Q2 or even Q4 and Q1, Q2. So that business is at least this point in time, seems pretty stable. And if we do see anything else to report, we will report that. At this point, our focus is to execute across all verticals of L&T, and I think we've done a pretty good job in building out new verticals there, especially airlines, railroads. We'll continue to execute on that as well as we go forward. On your last question, Aravind, maybe you want to take the question on expenses. So if you look at salary, I think two, three things kind of played out, right? One is that we saw a lot more on-site-centric growth, and therefore, you saw on-site utilization go up, which meant that the overall cost did not go up as much. Secondly, like, we had talked about some amount of pickup in DR, and that again becomes a nonlinear kind of growth. So therefore, there are a lot of puts and takes, but Ayush, this is broadly, you know, how the cost kind of played out and, you know, resulted in a margin expansion of forty basis points. Yeah. I don't think there's anything to call out on wage hikes per se. I think it's pretty much BAU for on that front. Thank you. But just extending on the margins, if I can ask. So going forward, if I see, like, to reach the 16% high band of the margin, it would be a cover last for the 3Q and 4Q, whereas for 14.6%, it would be, you know, on the lower side of the currently what we wanna be reporting. So where are we, like, most comfortable that what are the margin levels that we are having that that can lead to, you know, on the upside of the margins, that guidance that we have, that is a 16%? If you can just also quantify for the same. And the very last question on adding to this is on the headcount addition. What sort of trajectory are we eyeing for the headcount? Because, headcount addition, it's still, it's not positive for us, whereas for the peers, it has been positive for, you know, for the past couple of quarters. Plus, they are also, you know, commenting that they are hiring for the freshers as well as few of the laterals also. Thank you. Sure. So, see, I think we have given a range, Ayush, right? So between 14.6% and 16%, and I think right now, in the quarter gone by, we've delivered probably higher than the midpoint of the range, right? So it's not 16%, it's not 14.6%. I think it's a range that we are comfortable with. I think we will operate in that range in the near term, right? There could be a little bit of ups and downs, but you know, largely we are comfortable where we are. Right. So that's the point on margin. On headcount, I think you know, we've kind of shown growth keeping headcount flat, which I think is a positive, right? It obviously depends on the nature of growth. We obviously have flexibility in our supply chain to increase or decrease the headcount. I think we will take a very prudent call based on the line of businesses we see growth, the amount of infusion of AI that we can do on delivery and take a conscious call. Yeah, I think also, I think from a peer group standpoint, you know, Ayush, you mentioned that some of them have added headcount, especially on the fresher side. I think our utilization was actually much lower than theirs. They optimized utilization about eighteen months ago. We continued to operate at a much lower utilization because of, you know, whatever supply chain metrics we had at that point. We've improved utilization even this quarter, which basically tells you that we are converting headcount available, and we'll continue to do that as much as we need to. And then at that some point, if you see a net addition of headcount, that's gonna be an outcome, not an objective function per se. So I think there's a pretty rigorous rolling ninety-day for headcount forecast that gets baked into by service line, by geography, by skill set. That's what drives the headcount metrics. It's not a vector function. We are not working backwards from how many people should we hire from, you know, from lateral or campus. We are working forwards from how many people do we need in the next ninety days to be able to deliver to the customer? Sure. Thank you so much. I'll join you again. Thank you. Thank you. We have the next question from the line of Rahul Jain from Dolat Capital. Please go ahead. Yeah, hi. Thanks for the opportunity. Congratulations, Aravind, on the new role. My question is, I mean, of course, this has been asked in many way. I'm just trying one more way. The way you are talking about confidence confidently about the deal without, with the number being weak, is it a way to look at it that the ACV data on a YOY basis is much better? That gives the confidence. Is that the way to measure it? Or it would be like a continuous win and sprint, so that is how you get a confidence that things should continue to stay better year on? Yeah, I think there are two ways to look at it. One is, definitely there is a higher proportion of shorter burst deals that basically means that I may be able to consume that within the year. So yes, the percentage of ACV to TCV is probably higher in 2024 than it was in 2022, 2023. Second, we are coming off of a down cycle. There is still unconsumed SOW spend that we are consuming right now, for which I don't need to go sell new TCV. I think we mentioned this maybe a year ago, that a $30 million one-year deal got converted into a $30 million two-year deal, and we are consuming some of those deals as we speak, for which I don't need to actually go sell a new deal. So elongation of TCV to revenue conversion is actually paying dividend right now because we are actually able to consume that TCV, you know, as the cycle turns back. And that's kind of what we are seeing in actually many accounts. So in a way, what you're trying to say, your unexecuted order book continues to remain high. That is the metric that is giving comfort? Yes. Un-unconsumed. Got it. Because we did say that TCV to revenue conversion was actually stressed for almost four or five quarters. Right. Fair. Thank you. Thank you. The next question is from the line of Chirag Kachhadiya from Ashika Institutional Equities. Please go ahead. Yeah, Sir, sorry to interrupt, but the line for you is very muffled. Hello, is it better now? Not really, sir. If you could please, Hello. Change your handset mode. Hello? Yes, yeah, go ahead. I have just one question. Other than BFS, which vertical you are more comfortable that it will, you know, support the growth and all in the second half as well as in effect next year? Yeah, I think we basically called for BFS and TMT to be leaders. Almost three quarters in a row, they've been delivering on that promise, and we still believe there is upside left. I think we said, we've called for stabilization in others, i.e., healthcare, which also has kind of stabilized and shown growth this quarter. We talked about insurance being a YOY growth story as well, because we have been working on recovering that pipeline. So I think pretty much broad-based, led by BFS and TMT, and I think we have some more work to do to get it a lot more broad-based across regions as well, and that's also underway as we speak. Some of our peers are struggling in TMT vertical. What differentiation we are providing that we know more comfortable with the TMT part of the business? I think the tech-led, account-led challenger positioning that we are taking with some of those established large accounts for our peers is the reason why we are able to replicate some of the success that we've had in other verticals in TMT as well. And obviously, we've invested over the years in building domain expertise, whether it is embedded engineering, R&D, software engineering, device validation, product engineering, and all of those are helping right now to expand not just the number of logos, but volume share in those logos. And I think I gave the example of a TMT customer where we signed a large deal with a consolidation play this this quarter. Okay. Thank you all the way. Thank you. Thank you. Ladies and gentlemen, that will be our last question for today. I would now like to hand the conference over to Mr. Nitin Rakesh for closing comments. Over to you, sir. Thank you all again for joining us early in the day. I think we covered a lot of ground in the last 60 minutes. So thank you again. Wishing you and your family a wonderful upcoming festival season, and looking forward to speaking with all of you in the new year. 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.relation.