Ladies and gentlemen, good day, and welcome to the Coforge Limited Q2 FY 2025 Earnings Conference Call. Please note all participants will be in the listen-only mode, and this conference is being recorded. We have with us today from the management team, Mr. Sudhir Singh, CEO, Mr. John Speight, Chief Customer Success Officer, and Mr. Saurabh Goel, CFO. We will begin the call with opening remarks from the management team, and post that, we will open the floor for questions. Before we begin, please note that some of the statements made in today's discussions relating to the future should be construed as forward-looking statements and may involve risks and uncertainties. Please refer to the disclaimer to this effect in the company's Q2 FY 2025 earnings press release. With that, I now hand the call over to Mr. Sudhir Singh. Over to you, sir. Thank you, Inba. Ladies, gentlemen, thank you very much for joining us today as we share our Quarter Two Fiscal Year 2025 performance and the business outlook going forward. Quarter Two has been an exceptionally good quarter for the firm, and not only has the quarter been an exceptionally good quarter, it has also been a quarter that has validated the three key assertions that we made at the beginning of this fiscal year. You will recall that at that time, our three assertions were seen as unconventional and met with some degree of concern. You will also recall that those three assertions, which now stand vindicated, were: One, we had shared then that given the incredibly detailed due diligence we had done, we believed that the Cigniti business was foundationally a healthy one, and that growth of both businesses would accelerate remarkably and immediately on account of synergies once we brought them together. That was assertion one. Assertion two that we had made was we had shared that even though we were stopping the practice of annual revenue guidance, the health and outlook of our organic Coforge business, and by organic, I mean all Coforge businesses excluding Cigniti, was very robust. We were not, repeat, not undertaking an acquisition because our organic business was stressed. We had emphasized then that we were undertaking a material acquisition because our organic business was in the pink of health. Assertion three that we made at the beginning of this fiscal year was. We were at that time, you will recall, the first management team in the industry to state that we saw a definite and a positive turnaround in the demand environment, based not on analysis from any analyst, but based on the buildup of our indents. Ladies, gentlemen, as you reflect on those three assertions made at the beginning of the fiscal year by us, please contrast them with our Quarter Two performance that I shall now read out. In Quarter Two, the Coforge organic business has grown 6.3% sequentially in U.S. dollar terms, while the standalone Cigniti business has grown equally strongly by 6.1% sequentially in U.S. dollar terms. With both businesses registering exceptional growth, the firm grew sequentially in Quarter Two by 26.8%, that's sequentially, in U.S. dollar terms. We crossed the $1 billion run rate only seven quarters back, and today, seven quarters later, we are now operating at a run rate of almost $1.5 billion. What makes this synergy-driven performance even more remarkable is the concurrent expansion in EBITDA. The Coforge organic business has increased its reported EBITDA by 125 basis points in H1- over- H1 of last year. At the same time, please note, the Cigniti business has seen its EBITDA jump by 360 basis points sequentially to 16.2% in one quarter alone. We expected Cigniti to hit a 16.5% EBITDA target by Quarter Four, but we now believe that we will hit more than an 18% EBITDA target for the standalone Cigniti business by Quarter Four this year. Ladies, gentlemen, with that preamble, I shall now talk you through the quarterly performance and our assessment of the outlook. Beginning with the revenue analysis. I am pleased to report that during the quarter, the firm registered a revenue of $369.4 million. This represents a sequential revenue growth of 26.3% in CC terms, 26.8% in U.S. dollar terms, and 27.5% in Indian rupee terms, respectively. Equally importantly, the growth has been evenly spread across verticals, indicating that the growth trajectory of Coforge is likely to sustain. It is not a lopsided growth that Coforge is experiencing, focused on either a particular vertical or a particular geography. All verticals, all geographies are growing robustly. During the quarter, our banking and financial services vertical grew 5.2% sequentially and contributed 31.3% to our revenue mix. The insurance vertical grew 8.9%, that's 8.9% sequentially, and contributed 21.8% to the revenue mix. The travel vertical grew 6.2% sequentially and contributed 18% to the total revenue. The government vertical outside India grew 6.7% sequentially and contributed 7.8% to the revenue mix. With that, I shall now move on to the margins and the operating profit discussion. During the quarter, we delivered an EBITDA of $58.4 million, registering a sequential growth of 17.6% and a year-on-year growth of 37.6%. This reflects an EBITDA margin of 15.8% for this quarter, which is higher by 55 basis points over the same quarter last year. You will recall that wage hikes at Coforge were undertaken in quarter two beginning. For the half year ending September 2024, EBITDA margin stands at 16.4%, higher by 125 basis points over H1 last year. Moving on to order intake. Over the last 10- quarters, we have been clocking an order intake of more than $300 million per quarter, every quarter. In the current quarter, the firm saw an order intake of $516 million, which includes $67 million from Cigniti. The next twelve months signed order book has moved from $1.07 billion in the previous quarter, it has jumped to $1.3 billion in the current quarter. This represents a 40% increase in the next twelve months signed order book over last year's same quarter. The large deal velocity sign and signing continues unabated, and the velocity seems to be picking up. During the quarter, we signed three large deals, one in Continental Europe, one in North America, and one in U.K. Moving on to people metrics. On the people front, the addition of Cigniti has added 4,430 people to our headcount. Excluding Cigniti, the organic Coforge business added 1,441 people, which represents a 5.4% increase sequentially in the net headcount. This increase of 5.4% in net headcount of the organic Coforge business follows the increase of net headcount by 7.5% in the last quarter. Our total headcount for the quarter stands at 32,483, reflecting a net addition of 5,871 employees during the quarter. Attrition continued to be stable, and the last twelve-month attrition during the quarter stood at 11.4%, including the Cigniti attrition, which is at 11.7%. With that, I shall now request John Speight, Customer Success Officer, Coforge, to walk us through capability and delivery highlights. John, it's all yours. Thank you, Sudhir. I shall now touch upon the highlights of the quarter related to our delivery operations. In the banking sector, we continue to grow our strategic partnership with a leading U.K. bank, signing a new three-year deal for legacy modernization to optimize costs and improve their customer satisfaction. We also successfully completed a comprehensive assessment for the wholesale division of a Tier 1 global bank, evaluating their maturity around resiliency, engineering, and agile organization structures. Planning is now on the work on the next phase. In the industry insurance sector, we signed a three-year deal for a global insurer to implement an end-to-end Gen AI solution to transform automation across their enterprise. For a leading U.S. product provider, we successfully completed the setup of a 500-strong GCC. This is expected to grow to more than 1,000 in the next three years. We also secured a major three-year deal with a Tier 1 insurance major to be their grow and run partner. In the travel sector, a three-year renewal at a major Australian airline will see us continue to provide end-to-end managed services, delivering enhancements across business intelligence, infrastructure, and applications. In the retail sector, we secured a major three-year managed service deal with a top Australian supermarket chain to automate quality engineering services across their e-commerce and mobile channels. The government sector continues to see strong growth. In the U.K., we have entered a five-year strategic partnership with a key regulator to deliver CRM solutions that manage partnerships and citizen records. We also closed a multi-year deal for a leading health service provider to provide an integrated contact center and CRM solution that supports the delivery of urgent patient care to citizens. While in Australia, we are implementing a new low-code platform to streamline their processes for a large state government department. Moving on to partnerships. We are partnering with ERM and Salesforce on an innovative sustainability solution called the Environmental and Net Zero Offering, or ENZO. Launched officially in August, it is a full BPaaS offering that helps organizations meet their Scope 1, Scope 2, and Scope 3 accounting and reporting obligations under the Paris Climate Agreement. Our strong alliances have continued to develop, starting with a renewed designation as a Microsoft Azure expert managed service partner, giving us top-tier Microsoft partner status, one of only 127 worldwide. Meanwhile, we are really pleased to announce that Pega has promoted us to their top-tier partnership within their Global Elite program. We have developed new migration accelerators to support legacy transformation across key platforms. Our accelerators have the capability to automate over 60% of the migration, delivering savings in both cost and time to value. We continue to achieve notable industry recognitions during the quarter. Designated by Everest as Leader in Low-code Application Development Services PEAK Matrix, Leader in the Digital Transformation Services for Mid-market Enterprises PEAK Matrix, and Major Contender in five other categories. With that, I would like to pass over to our CFO, Saurabh Goel. Thank you, John. Let me take you through some of the financial highlights for the quarter. The organic EBITDA margin for the quarter stood at 16.6%, reflecting decline of 126 basis points over previous quarter. All wage hikes were rolled out effectively July first in the current quarter. Please note that in the prior years, the impact of wage hike has been 252 basis points to 270 basis points. You would also recall that in the beginning of the year, we had not given revenue guidance, but we had guided for gross margin improvement of 50 basis points and reported EBITDA being flat for FY 2025. We are pleased to report that end of H1 FY 2025, our organic gross margin is 32.2%, up 64 basis points. EBITDA is 16.4%, up 125 basis points. Organic EBIT is at 12.9%, up 114 basis points. In H1 FY 2025, we had acquisition and integration-related expenses, which had an impact of 2.3% on our profitability. This will get normalized in coming quarters. The depreciation of the consolidated financial statements reflects impact of amortization of intangibles, such as customer relationships and non-compete, that got created on account of purchase price allocation because of Cigniti acquisition. The amortization impact for next three years will be $10.7 million per year. The current quarter had an impact of INR 22 crores on account of this amortization. We also guided for 16% EBITDA margin for Cigniti for the current financial year, post we acquiring the firm. Current quarter witnessed increase in EBITDA margin to 16.2%, which was 360 basis points over previous quarter. And we are now targeting to improve this to 18% by end of the financial year. We have received SEBI approval on the open offer, and the open offer is expected to get concluded by mid-September. The open offer, the tender for the tendering of shares, will start in next two, three days from now. At the end of quarter two, we have cash balance of $217 million, which includes $137 million in the monitoring account from QIP proceeds. Net of that, we have $80 million of cash in the balance sheet, and we have a debt on account of working capital of $86 million. OCF, excluding payment on account of transaction-related expenses for H1, stands at $39.3 million, as against the cash burn of $0.5 million, in the same period over last year. In Q4 FY 2024, we had mentioned that we are working towards normalizing the operating cash flow through the year, and in this improvement in OCF in quarter one and now in quarter two is a result of the same. ESOPs have been granted to the Leadership team towards the end of September, and hence, from next quarter onwards, the ESOP cost is expected to go up in a range of 180 to 200 basis points per quarter for next two quarters. This includes ESOP issued to Cigniti Leadership as well, and we have used our existing pool for the same. With that, I will hand over the call back to Sudhir for his comments and outlook. Thank you, Saurabh. And, just a quick correction. As Saurabh said, we have received the SEBI approval on the open offer, and it is expected to be closed by mid-November, not mid-September, as we called out. So that's only two or three weeks from now. Summing up in outlook, let me start off the outlook commentary with a broader statement of intent. The growth story of Coforge is now 29- quarters old. This is a time-tested team that is hungrier today, more hungry today, than it was more than seven years back when we first came together. Our sustained and very robust growth at Coforge over the last seven years has been driven by an intense execution-oriented culture that is uniquely our own. It is underpinned by a deep-rooted personal pride and an ambition to create a platform that will be the collective legacy of each one of us at Coforge. The last seven years have seen spectacular growth. The next seven years will be better. With that, moving on to the outlook. A 27% sequential dollar growth, with the organic business having grown 6.3% sequentially, a concurrent and material expansion of 145 basis points in H1 in EBITDA. The second consecutive quarter of significant net headcount addition, a large deals pipeline that is looking very robust, and finally, an ever-strengthening next twelve-month signed order book, which now is 40% higher YoY, gives us confidence that the coming quarter, and quarters to come, shall see robust and sustained growth. The growth and the margin expansion at Cigniti are a preview, as Saurabh said, of sustained growth and further increases in margin to follow. We have operationally fully integrated the Cigniti team, and the synergies have exceeded even our expectations. As noted, we expect Cigniti standalone EBITDA to go up to 18% plus over the next two quarters alone. Overall, our confidence in the commitment that we offered at the beginning of the year to deliver robust and sustained growth is ironclad. Our medium-term guidance of not just hitting the $2 billion mark, but also delivering a concurrent material expansion in EBITDA is intact. Team Coforge has turned in execution of the highest order over the last seven-plus years. We look forward with confidence and eagerness at the next seven years. With that, ladies, gentlemen, I conclude my prepared remarks, and I look forward to hearing your comments, and we all look forward to addressing your questions. Thank you. Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may click on the Raise Hand icon from the Participant tab on your screen. We request participants to restrict your questions to two, and then return to the queue for more questions. To rejoin the queue, you may click Raise Hand icon again. We will wait for a moment while the question queue assembles. We take the first question from Sulabh Govila from Morgan Stanley. Please go ahead. Mr. Sulabh Govila, could you please unmute your connection and ask your question? Yeah. Hi, am I audible? Yes. Yeah, hi. Thanks for taking my question, and congrats on a good quarter. So, Sudhir, you mentioned on the outlook, near term as well as going forward. So just wanted to, you know, double-click on that. In the next quarter, particularly, what are you hearing on furloughs from the quarter and the expectation for the same versus, let's say, last year? And then with respect to verticals, last quarter, we had specifically called out BFS to grow, let's say, in double digit for the year. Is there any incremental positive change in other verticals also that you've heard during the quarter? That's my question. Thank you. Thanks, Sulabh. As far as furloughs are concerned, we expect furloughs to be in line with the normal trend in quarter three. So we do expect furloughs to happen. We don't expect them to be on the higher or the lower side than they are in a normal year, and we bake that into our projections. As far as verticals are concerned, as you've noted, BFS has grown 5.2% sequentially. Insurance, you would have noted, has grown almost 9% sequentially, and travel has grown more than 6%. Government also has grown more than 6%. So, BFS, we had said that we will deliver double-digit growth. I suspect that is assured, given this quarter's performance. We had also said that we expect growth to happen in a tough macroeconomic environment because all verticals are firing, and all verticals will deliver growth that will largely be in the same ballpark. We maintain that assertion going forward as well, Sulabh. Understood, Sudhir. The second question I had was on Cigniti. Is the go-to-market and cross-sell plan already in motion there? And if you could highlight, you know, any updates on the same. Go-to-market plan is firmly in place. At the end of the last quarter, we had talked about the fact that the go-to-market engine was already being headed at that point in time by a Coforge Leader who had moved in and had been working with the Cigniti team since two and a half quarters. She's now in charge. She's the one who's been driving it for the full year, and the results of her and her team's efforts, not just in terms of driving growth, but in terms of working together as a composite team, part of the broader Coforge fabric, I suspect, are evident for everyone to look at. Cross-sell is moving exceptionally well. So when I talked about the margins having exceeded our expectations, the only thing that's exceeded even margins on the expectation side has been the eagerness with which a team that was largely selling only one service line has embraced the other ten that they can now sell. Understood. Then if a third question I may ask, you know, related to the bookkeeping question. Saurabh, below EBITDA, this one-off on transaction-related expenses as well as past liabilities from Cigniti, just- Yeah. Wanted to understand whether they will recur from 3Q or, or they are done? So, see, we don't expect any past liability to now come in because we have done our purchase price allocation, and we have otherwise almost taken care of any expected exposures that were there. So we don't expect anything around past liabilities to come in, number one. Number two, on the integration-related expenses or the merger-related expenses now, so you look at last quarter, it was a significant number. It's come down to two- Yes. Million dollars. I think it will be some million dollars in one or two quarters, and then it will die off. Understood. Thanks for taking my question. Thank you. We'll take our next question from Abhishek Pathak of Motilal Oswal. So may we request you to unmute your connection and ask your question? Hi, am I audible? ... Yeah. Hi, hi, Sudhir. Hi, Saurabh. Thank you for the opportunity, and for us, on a great quarter. So I think, as Sudhir mentioned, I guess, the Cigniti revenue growth was probably a bigger surprise than the margin beat. My question - the first question is, you know, considering the demand is now certainly recovering across the board, does it now become easier to sort of cross-sell service lines and services to Cigniti clients in this environment? And if yes, does it significantly, you know, sort of change or rather upgrade our expectations from Cigniti, versus what we acquired, you know, maybe, six, seven months back? That's one. And secondly, on the headcount bit, I guess, you know, you've been hiring quite strongly over the past couple of quarters. The utilization levels are now at 82%. I guess a lot of your peers are operating at 85%. So, is it tempting to sort of, you know, just sort of sweat the asset a bit more and go to 85% and manage margins or even exceed over there? Or do you think the demand is recovering sort of, you know, so much that you still want to hire and sort of, you know, still sort of build up that muscle on the headcount side? Thank you. Abhishek, thanks for both the questions. As far as Cigniti is concerned, the cross-sell of services was something that we were absolutely assured about, because we had spent a lot of time with the sales team of Cigniti, every level of the sales team. And it's not the demand environment, recovery that is largely driving the cross-sell effective, effectiveness. It's just the fact that that team was primed, and it was hungry, and our horizontal business units were primed. As I said in my commentary, our organic business was in the pink of health when we did this material acquisition. There's a great synergy in terms of our horizontal business units, working hand in glove with the Cigniti integrated business unit, market-facing unit, and that is what is driving the very strong cross-sell, which gives us... Which always gave us a lot of confidence, but hopefully gives everybody on the call also the same confidence that we've always carried around Cigniti. That's answer one. Answer two, as far as headcount is concerned, our utilization numbers, 82% that you called, our utilization numbers that, in our case, include trainees. At this point in time, we think the demand environment. I wouldn't classify it as demand environment. We believe that our pipeline is very strong. We don't want to sweat the asset anymore. We want to keep utilization at where it is, to make sure that the demand gets addressed, and the growth that we see in front of ourselves is not missed. Very, very clear, Sudhir. And on the. And if I can just squeeze in one more on the Cigniti margins. So, you know, the 30 basis points expansion is incredibly heartening. Now, going forward, is there any more low-hanging fruit that you will quite easily pluck, and the margins may expand to your guided range? Or do you think it requires more discipline going forward on Cigniti? Thanks. There are still... It's only one quarter. There are still low-hanging fruits. We've given you, we've shared, an estimate of 18% over the next two quarters. Most of that should come through addressing the low-hanging fruit. Structural improvements beyond that, again, are possible, but we'll talk about those next year. Great. Thank you. All the best. All the best. Thank you. Thank you. Our next question is from Debashish Mazumdar, from Swan Investments. Please go ahead. Good, good morning to the management team, Sudhir, John, Saurabh. Excellent set of numbers. So I have three set of questions, first on macro, second on organic Coforge, and third on Cigniti. So, so the first one is for Sudhir, obviously. Sudhir, if I remember correctly, one year back, you were the first person to call out that, the macro recovery, what others are building, and it is not going to come so easily. So do you think, we have crossed that level, and, where recovery has kind of started coming back, especially in your set of clients and, sectors? Yeah, Debashish, thanks for the question. You're absolutely right. Last June, when the general impression was that the second half of the calendar year, last year, would be great, you're right. We, as a management team, had said that there was gonna be no demand recovery, and I think we did turn out to be right. In March this year, March, April this year, we had made another assertion, and again, that was contrary to the prevailing commentary from our peers, that the demand environment has seen a definite and positive turn. We believe that is in play, and that demand environment will continue to underpin our growth going forward. Okay, okay, understood. The second question is related to the Coforge organic business. And congrats again for a good comeback quarter with a blown-up kind of CC growth. The question that I have is, if I see the vertical-wise growth and geography-wise growth, it seems to be extremely broad-based. So, is it like that this 5% kind of number is sustainable for next two to three quarters? Because it has not come from any single customer or single vertical, and you see that this recovery path is going to continue for at least next three, four quarters. Debashish, thanks for the question. As you're aware, we've stopped giving a formal guidance on numbers, but what we can assure you is that the broad-based growth is going to continue. One of the reasons why we did the Cigniti acquisition when we did was because at that point in time, looking ahead, we were incredibly confident about the broad-based nature and the robust nature of growth ahead of us. That's why we did it. Growth going forward, as you've noted, business-wise, geography-wise, service line-wise, will continue to be broad-based. It will also, I want to emphasize, be robust. At the beginning of the year, we said our growth will be sustained, robust and profitable. I can assure you, at the midpoint of the year, going forward, the growth will be robust, it will be sustained, and it will be profitable. Sure, sure. Good to hear that. The, just a related question to that: if I, see our hiring data, so, in most of our peers, either revenue growth has come in, in that case, hiring doesn't come, or vice versa. In our case, we are seeing that both revenue growth and hiring, going hand in hand with a very, tight utilization level of 80%-82%, and a tight attrition of 10%-11%. So, what I'm trying to understand is, have we cracked a very, good model here, where kind of hiring and, growth, goes hand in hand, and it doesn't, create any impact on our utilization in a single quarter? We don't go into a lopsided hiring. We have moved into a just-in-time hiring. So just wanted to get some thought on the strategy there. Debashish, it's more to do with the execution than with the strategy. When we say that Coforge has an intense execution orientation, what we mean by that is that I mean every team member is into the details. We believe the fact that we've been able to hire and forecast and recognize that there was a reversal in the demand cycle based on our own indents that were flowing in. The fact that we were confident in our assumption to be able to hire a quarter in advance is a reflection of the execution intensity and the ability of our people, supply chain Leaders, to be able to fulfill what our sales Leaders were able to sense, looking at raw indent data that was coming in. I think just to add to that, see, when we do a pipeline review, see, because when you start hiring in advance, the indents get raised almost 120 days to 130 days in advance of the hiring, because it's a one to two months of interview and 90 days of joining period. When we look at a pipeline and our ability to ascertain the deal closure timings and triangulate that with the hiring indents is something which is leading to this tight operations that we are managing. So it's a function of estimating when you will close the deal, and that can only happen if you are in the woods. You understand the stage of the deal at which it is in, along with then make sure that you start ramping up, keeping that in mind. So it's a function of both supply chain and the front end, working very, very closely together, along with the delivery organization. One extra point here is the fact that it's all underpinned by the incredible client centricity. We're very, very, very close to our customers, so we understand exactly their businesses and what their expectations are in advance. Sure, sure. Very clear. One last question on Cigniti. In case when we were acquiring Cigniti, we were very clear that there are two, three large clients which we were targeting to do cross-sell, and there are a few micro markets which we were targeted to do cross-sell. So, do you think that we are getting success? Obviously, numbers showing some amount of improvement for sure. Do you see the, we are getting success in those strategies of cross-selling to existing larger clients of Cigniti and getting into those micro markets? We clearly are, Debashish. Last week, we finished a four-day workshop, and we looked at every aspect of sales execution. We are getting success slightly ahead of what our expectations, which were already high, were when it comes to cross-sell. And we feel very assured about the prospects going forward as well. So, just to harp on this point: so in this quarter, growth in Cigniti numbers, we are getting, growth from selling higher Cigniti business to the existing clients in a more efficient way, or it is like selling more Coforge capabilities to the existing clients of Cigniti? In this quarter, the growth has largely come from selling Cigniti-only revenues. The pipeline on cross-sell, it has built up, is building up, and I suspect we will start seeing the first effects of that from quarter three onwards. Sure, sure. Thank you very much for answering my question. Wish you all the best. Thank you, Debashish. Thank you. Our next question is from Vibhor Singhal, from Nuvama. Please go ahead. Yeah, hi, am I audible? Yes. Yeah. Yeah. Thanks for taking my question, and, congrats, Sudhir and team, yet again, for a very strong performance. Sudhir, my question, first question was on the travel vertical. This vertical had a pretty weak FY 2024, and not just for us, in fact, for the entire industry. What is the outlook on this vertical? How are we seeing this? The growth has been quite strong this quarter, for sure. So, are things turning around? Are airlines, hospitality, and other parts of it looking to increase their expense? And any other large deal pipeline that, or deal that you might have signed or you might be looking to sign in coming quarters, would be helpful. Vibhor, thanks for the question. The large deal pipeline for the travel vertical is looking extremely promising. We are seeing deals spanning spend areas of IT modernization and mainframe offload. That's one area. We are seeing significant India GCC ramp-up-led deals in travel. That's the second area. We are seeing e-commerce and NDC for airlines-led deals, which is the third area. And then we are seeing guest experience and personalization for hospitality as the fourth area. So travel, the pipeline is robust. The large deal pipeline is very promising at this point in time. And what marks this change in the outlook for the vertical? And from the commentary that we're hearing from peers, I believe in the airlines, companies are still reeling under the pressure of delayed delivery from Boeing, and that is why many of their programs have been pushed out, and hence, the tech spends have been kind of muted. Any color on that? What has changed, and what is the view on the airlines specifically? So our travel exposure, Vibhor, is centered around airlines, airports, and travel tech. Travel tech is doing exceptionally well from a spend perspective. Travel tech firms are truly in a massive spend phase right now. Airlines saw a significant correction, positive correction, about four to six quarters back. Spends there have now stabilized, but our farming efforts and very active displacement of competition efforts are working well for us. Got it, got it. That was really helpful. That was really helpful. My second question, Sudhir, is on the overall banking segment. So of course, I mean, excluding insurance. Insurance, of course, had a rock solid quarter this year. On the banking vertical, what is the what are we looking at in terms of, let's say, new growth areas over and above our existing capabilities? How does Cigniti add... I mean, I'm sure Cigniti has more presence in the other verticals that we are looking to farm. But any contribution from Cigniti in that? But if not, how is the overall outlook on banking, specifically on any other sub-verticals that we might be looking to spawn? Cigniti, Vibhor, the largest vertical that they have is banking, and therefore, to that extent, the ability to cross-sell horizontal businesses in that functional space has gone up. Specifically to banking, the segment overall, as all of us know, continues to have macroeconomic uncertainties, and those are stemming largely from geopolitical events, high inflation, compliance-related complexities, and so on and so forth. Now, looking ahead, while the uncertainty in the sector is expected to continue, we do find, in our case, with our clients, that they are boosting investment in IT and cloud and data areas in particular. There's also significant interest in this space in GenAI. At least anecdotally, we are exploring ways to reduce cost or to improve customer experience by incorporating GenAI. One other area I do want to call out before we close this is one other priority area for investment that we are seeing is in financial crime prevention. That's one space. We are seeing compliance to Digital Operational Resilience Act in the European Union, and John can talk more to that. And we are seeing investment in systems to support open banking initiatives, which is a third space that is coming up. So financial crime, Digital Operational Resilience Act in Europe, and investment in systems to support open banking initiatives. John, would you like to add to that? Thank you, Sudhir. No, I'll say not too much, 'cause you've covered significantly most of the points that I'd actually was gonna raise. The only thing I'd add is to stress the open banking space. Obviously, in the U.S. now, that is ramping up. That's, I think, a key area. Compliance, you've mentioned, ongoing. I think legacy modernization, you'll see increasingly becoming more and more key, and the role GenAI is actually having in driving that legacy modernization agenda. I think that's about it, Sudhir. Yeah, and Vibhor, one thing that we've never talked about, one thing that we've never talked about is the fact that we had a very significant exposure to the mortgage industry. Right. But we never used that significant exposure to the mortgage industry as a reason for slowing down on the banking side. With the decrease in interest rates that's now happening, the mortgage sector also, we believe, is gonna have a gradual resurgence, and hopefully, that will boost loan origination and processing volumes, and it should have a positive uptick on our technology spend there. Got it, got it. And since you've touched upon the core, any color as to how much mortgage could be in terms of revenue size or percentage of revenue? I don't think we call out at a sub-segment level, Vibhor. We just call out at a segment level. So sub-segment, Revenue mix is not something that we have. Sure, not a problem. Thanks so much for that detailed explanation from yourself and John. I just have some bookkeeping questions for Saurabh, trivial but necessary nonetheless. Saurabh, you mentioned the new ESOP scheme has been approved, and the cost for that will come in from Q3. Yeah. That would be, how much basis point that you mentioned? I'm sorry I missed that part. Roughly 180-200 basis points. We had called out in the beginning of the year that ESOP cost will be roughly 180 basis points for the year. This is the assumption that the ESOP grants would have been given in the quarter one itself. But now, because the grants have been given in the current, in Q3, almost, beginning of Q3, we expect that cost to be in a range of 180 basis points-200 basis points, more towards 200 basis points. And it's for first two quarters, which is Q3 and Q4. Then we get into Q1 of next, 60 basis points-70 basis points of the old plan cost will go away... So that's how it will look like. Yeah. So next quarter, we are looking at a 180 basis points-200 basis point headwind from, on a Q1Q basis. On a Q1Q basis. Got it. Incremental impact will be one twenty basis points, not two hundred basis points. Eighty, seventy, eighty basis points is already sitting in the P&L. What I'm talking about is the incremental- Got you. Yeah, yeah, yeah. The incremental impact will be 120 basis points. The total cost of- 120 basis points. Yeah, yeah, yeah. Okay, got it. Got it. So 70, 80 basis points one is already there in the P&L. Exactly. Incremental will be 120 basis points next quarter. Absolutely. And in Q1, another sixty basis points will go away, which is of the current ESOP scheme. Which is, the current cost will go away. You're right. So - 120 in this quarter, Q3, same in Q4, and then + 16 Q1. Right. Just to give us, Yeah Spread out the math. Got it. Yeah. Got it. And also, there was this INR 14.4 crores consulting expense in Cigniti this quarter. Last quarter, of course, we had some expenses. So I am assuming these are related to the merger and integration. Are these expenses now done, or do you expect some more of them to come in Q3 and Q4? So the expenses in Cigniti were not on account of merger. The expenses on Cigniti- Okay. you will see that there was a INR 14 crore hit in Cigniti, wherein consolidation Right. It flew down only to nine crores because some expenses were already part of purchase price allocation, and hence, it didn't impact my consolidation. And then, this eight crores of past liability was identified on account of historical taxes and all. So all of those are now behind us. We don't expect at least any past liability in Cigniti to come and hit the consolidated financial statements going forward. The integration expenses, the merger expenses, would be sub million or so for next couple of quarters, and then it will go away. Got it. Got it. And just last question on the open offer. As per, if I read the timeline of the open offer, we are looking to close in terms of, post-tendering and everything by, November, mid-November or, and the entire process is expected to close by December seventh, if I read the schedule correctly. Yes. So December seventh is the last date, which is the most stretched date which can happen. But we expect the whole thing to get closed at least by mid-November. The tendering and everything will get closed. The payment to the shareholders would have happened by mid-November. Got it. Got it. Got it. Great. Thank you so much, Sudhir, Saurabh, and John, for taking my questions, and wish you all the best. Thank you. We take our next question from Manik Taneja of Axis Capital. Please go ahead. I hope I'm audible? Yes, sir. So Sudhir, extremely strong performance once again. Just wanted to pick your thoughts on a very interesting statement that you made at the outset, saying that the next seven years look much more exciting for the Leadership team. If you could give us some... While you've talked about the $2 billion revenue growth target, but if you could help us understand, if you're looking at further acceleration in terms of growth, given the platform that we've created now. That's question number one. The second question was with regards to basically more of a bookkeeping question, in terms of what is ailing the cash generation for us through recent years, despite the fact that we continue to do extremely well from a growth standpoint? Those are my two questions. Okay. Saurabh, would you like to go with cash generation? Yes. And I'll take the acceleration after that. Yes, so historically, we have been around 67% to EBITDA of OCF being generated as for a financial year. And the challenge that we had was that always quarter one, quarter two, we used to burn cash because of bonuses getting paid for the whole financial year in quarter one or quarter two, increments happening and some vendor payments coming in. So current year, at least the normalization of cash has happened, and sitting today H1, we are looking at almost $40 million of cash being generated. If you're looking at the cash flow, the statutory statement, a lot of that is also to do with acquisition-related expenses that have got paid out. But otherwise, from an operating cash flow perspective, H1, we have generated $39 million in the current financial year, as compared to a cash burn of $0.5 million in same period last year. We expect that for now, around 67%-70% of EBITDA is the OCF we would like to operate on. And, Manik, the, a lot of large deals today that also come in, they come in with upfront investments in the account, either on account of transition or transformation, wherein the recovery starts happening over a period of time. So we're using our cash to make sure that when we sign large deals, we are making those upfront investments in the account, and that is why, we are making sure that we at least operate at 65%-70% OCF. We look at our DSO, which is, Days Sales Outstanding. They continue to be healthy at sixty. You look at our Unbilled, they continue to be healthy at fourteen odd days, and hence, DSO for billed and Unbilled is both 74- days. So it's not that I have a receivable problem. Moving on to the other question that you had, Manik, about the confidence in the next seven years. That confidence is near absolute as far as we, as the collective Leadership of the firm, are concerned. Confidence comes from two or three different things. Coforge today is a far more diversified organization than it was seven years back. Seven years back when we got together, almost 40% of our revenue used to come from airlines and airports only. And five years back, we were possibly more impacted than any other firm, because when COVID came, 30% of our revenue used to come from airlines and airports. So the firm is, one, not just bigger, but it's diversified significantly. Second, as we look at the future, our growth vectors over the last seven years have primarily been industry-led. Where we stand with the Leaders we have, the, the untold story of Coforge over the last two, two and a half years, has been the behind-the-curtains work that has been done in terms of Leadership, capability, partnership, and alliance build in product engineering, in cloud services, in data services, and experience-based technologies. They are now fast becoming additional vectors for growth. The third thing that gives us a lot of comfort is the fact that what we internally call big bets, geo-based big bets, the newer geos that we've gone in quietly, but with tremendous intent, are playing for us. So it's a mix of, one, a diversified industry mix; two, a very strengthened horizontal capability mix; and three, an expanded geo mix that gives us confidence. And as I had said, in the closing comments as well, we believe if we can accelerate growth further over the next seven to ten years, wherever we land up, and hopefully it will be in an incredible place, we would all, as a collective Leadership, have created something that we can regard as our collective personal legacy, and that is what drives us going forward. Thank you for the detailed thoughts. Sudhir, also wanted to get your thoughts around the recent deals. We've seen an increasing share of GCC roll out lead deals in the industry, including for you. If you could help us understand what's driving that, and do you see that as a risk from a medium-term standpoint, given the call option that customers would have? Oh, we. You're right, Manik, and we concur with you. We also see very strong activity in the GCC space. We believe that unlike the earlier cycles, where GCCs used to get set up and there used to be a boom and bust cycle over three to five years, this seems to be a more concerted push and a more personal agenda-driven push. In most cases, GCCs are being helmed or are being driven by Indian origin Leaders who have gone up the ranks, and that number has swelled. So we see this as something that's likely to sustain, and we have built up the process of supporting GCC build, the process of creating virtual GCCs within our premises, and the process of supporting both micro and mega GCCs as part of our sales plan going forward. Thank you, and all the best for the future. Thank you, Manik. Thank you. Before we take our next question, we'd like to request participants to please limit your questions to two per party. Time permitting, you may come back in the queue for a follow-up question. Great. We take our next question from the line of Abhishek Bhandari of Nomura. Please go ahead. Mr. Bhandari? Can you hear me? Yes. Please go ahead. Thank you for the chance. My questions have been answered. Thank you, and all the best. Thank you. We take our next question from the line of Kawaljeet Saluja of Kotak Securities. Please go ahead. Yeah, hi, Sudhir. Exceptional quarter. Congratulations. A couple of questions, Sudhir. First is that, you know, your deal pipeline and deal wins have been exceptionally strong, which I don't think mirrors across the industry, but nonetheless, would love to get your views on whether it's the environment or something has changed in Coforge's portfolio. That's the first question. The second question relates to the earlier question asked by Manik on GCCs. You know, I mean, how would you characterize the durability of revenues of GCCs, and how are the nature and shape of engagements different, and the third question I have is for, you know, Saurabh. Saurabh, the gap in the Ind AS margins and the Fact Sheet margins have expanded, you know, quite a bit in the current quarter. What would you attribute the same to? Sure. Saurabh, do you want to lead with question number three, and then I take one and two? Yeah. So, two things, commentary from that. So if we look at our segment report, okay, which is again, the audited statement, you look at the EBITDA margin reported there, which is 14.9%, and that is, that does not include. That EBITDA margin of 14.9% does not include the one-time transaction-related expenses of INR 20-odd crores, plus the hit that we had taken on account of Cigniti, prior year expenses that had come and hit us in the current quarter to the extent of INR 8-odd crores. If we just add that back, 14.9% EBITDA margin in the result sheet, which is a signed, audited result sheet, as part of the segmental information, will go up to 15.8 odd%, which is also reported in the management Fact Sheet of 15.8%. So that's how that's the gap between the 14.9%, which is there in the signed segmental results and the Fact Sheet, because there are two items which are not included in the concurrent, the going forward EBITDA margins or the recurring EBITDA margins. Coming back to question number one and two, Kawaljeet. The first question that you had shared was around the deal pipeline and what's driving it. We think it's more a function of the mix having evolved. To give you an example of the three large deals that we've signed in the current quarter, one of them is in the healthcare space, at the intersection of the healthcare and the government space. Now, healthcare as a vertical was never really material for us. We started talking about building it up about two and a half years back, and the fact that we've signed this deal last quarter, one of the large deals we talked about was from the retail vertical. So part of it is coming in, one, from an expansion in the credibility that we built across newer verticals, that we did not have credibility or capability at scale earlier. The second set of deals and why they're expanding, and hopefully we'll have a lot more to report, are coming in largely from product engineering. Product engineering for us, and we call it engineering internally, is for us, is one of the largest, or I suspect the largest HBU at the current point in time. And engineering, a lot of the credibility that is coming from the AdvantageGo platform that exists, the MonaLisa platform that exists, the SATS platform that we created on a turnkey basis, the work that we've done with platform players in asset wealth management and travel tech, is allowing us to create large deals at scale. That's the second thing that's helping us pick up. And the third thing that's allowing us to widen the funnel and increase the velocity is the geographical expansion, Kawaljeet. This quarter, one of the three deals, I talked of one earlier, is from Continental Europe. Now, Continental Europe, again, you know this very well, was not a very happy hunting ground for us in the past. But what we've done over the last three years, quietly, but in a very sustained manner, building up a sales presence there under the Leadership of John, who's on the call, is what has led to that deal closure as well. So that's our assessment of why the deal pipeline is not just sustained but is expanding. Number two, Kawaljeet, as far as GCCs are concerned, the core mandates, when we do get them, the initial mandate on GCC is always a time-bound mandate. For example, we've secured a mandate to set up a GCC where the initial mandate was 500 people. That was supposed to be a BOT operation, and it was expected to be quick revenue that would be then. It would fall over a cliff after three years, after we handed over operations. But nine months into that transaction, with that client, that 500 people business is running. It has another two years to run. The number that we have been able to inject into the rest of the client is another 700, so we're operating at 1,200. I can't give you a very clear answer there. A core element of the revenue stream that's coming in will have a cliff. I don't know what to call it, a cliff vesting or a cliff fall at some stage. But if we continue to deliver, we are finding that we are able to expand into ancillary spaces. That's how I would characterize the answers, Kawaljeet. Fantastic. Thank you so much, sir, for those answers today. Thank you, Kawaljeet. Thank you. We take our next question from Ravi Menon of Macquarie. Please go ahead. Hi, thank you for the opportunity. Congrats on really good revenue numbers. So two questions. One, it looked like you integrated Cigniti, even though you still have only 27.98% at stake. I guess this is because you now have control of the company. Is that right? That's right. We have board control. That's why we've integrated the firm and we've consolidated results. Second is, you know, the deal wins, $560 million. It's the third best in any quarter so far. Could you talk a bit about, you know, how much of a proportion of this are renewals and, what's really net new? Let me just reflect very quickly. The healthcare slash public sector intersection was net new, the one I talked about. The Continental Europe deal was net new, which I talked about, and the U.S. deal was EN, but most of it was new revenue. So largely new revenue. Two of them are actually NN, and one of them is EN, with the accent being on the N and not the E. Great. Thanks so much. And any of the GCC deals, do they have any buy or, build, operate, transfer sort of structure? Yes, some of them, as I said in response to Kawaljeet's questions, do. All right. Thanks so much. Best of luck. Thank you. Thank you. Ladies and gentlemen, that was the last question. I now hand over the call to Mr. Sudhir Singh for closing comments. Over to you, sir. Thank you, Inba. Ladies and gentlemen, thank you very much for your time. We've always said this and we've always meant it, the questions you ask us, the insights that you provide or the questions provide, are a very valuable guide and a milepost for us. We look forward to further interacting-