Ladies and gentlemen, good day and welcome to Happiest Minds Technologies Limited Q3 FY25 Earnings Conference Call hosted by ICICI Securities Limited. 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 the star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Aditi Patil from ICICI Securities. Thank you, and over to you. Thank you, Steve. Good morning, ladies and gentlemen. Thanks for joining us today on Q3 FY25 Earnings Call of Happiest Minds Technologies Limited. On behalf of ICICI Securities, I would like to thank the management of Happiest Minds for giving us the opportunity to host this earnings call. Today, we have with us Mr. Ashok Soota, Executive Chairman, Mr. Joseph Anantharaju, Executive Vice Chairman and CEO, Product and Digital Engineering Services, Mr. Venkatraman Narayanan, Managing Director and Chief Financial Officer, Mr. Rajiv Shah, Executive Director, Mr. Ram Mohan, President and CEO, Infrastructure Management and Security Services, Mr. Sridhar Mantha, President and CEO, Generative AI Business Services, and Mr. Sunil Gujjar, Head of Investor Relations. I will hand it over to Sunil for a safe harbor statement and to take the proceedings forward. Thank you, and over to you, Sunil. Thank you, Aditi. Good morning to all participants in the call. Welcome to this conference call to discuss the financial results for the third quarter ended December 31st, 2024. I'm Sunil, Head of Investor Relations. We hope you had an opportunity to review the earnings release issued yesterday evening. For this call, let me quickly outline the agenda. Ashok will begin the call by sharing his perspectives on the demand environment, business environment, and our results. Venkat, Joseph will then speak about our financial performance and operational highlights, after which we'll have the floor open for Q and A. Before I hand over, let me begin with the safe harbor statement. During the call, we could make forward-looking statements. These statements consider the environment we see as of today and carry a risk in terms of complexity, because of which the actual results could be different. We do not undertake to update those statements periodically. Now, let me pass it on to Ashok. Thank you, Sunil, and good morning to everyone. Happiest Minds has reported another quarter of strong deal momentum and performance with a revenue growth of 28.5% year on year, and we are set to report our best performance since the IPO in absolute terms. We launched four transformational initiatives this year, which included the acquisitions of PureSoftware and Aureus. The success of the same is evident from our year over year growth. The other three initiatives will accelerate our organic growth in the year ahead. These initiatives are the creation of the GenAI business unit, verticalization into six industry groups, and induction of our Chief Growth Officer. At our Generative AI Business Services, we are collaborating with our clients to explore opportunities for leveraging generative AI to enhance business value, increase efficiency, and productivity. Our goal is to integrate generative AI features into their products, services, and provide them with a competitive advantage. The adoption of this promising technology has picked up speed with our customers embarking into enterprise-wide adoption. Apart from the projects we have already delivered in these few months, we have about 15 projects in a proof of concept stage, which will lead to significant orders and projects in the next fiscal. I will leave Joseph to describe our success in the other transformational initiatives. We will persist in advancing the transformational agenda we have set forth, which I believe will position Happiest Minds for a very, very superior performance in the years ahead. With this, over to Venkat. Thank you, Ashok. Good morning, all. We continue our march into the second half of this fiscal with a good set of numbers. At 28.2% year over year growth in constant currency, our industry-leading performance has only accelerated since the beginning of this fiscal. As Ashok alluded to, our results are showing the impact of the solid execution backing our transformational agenda that we undertook at the beginning of this year. Our revenues for the quarter in dollar terms stood at $62.7 million. Lower working days, higher leaves, and a bit of furloughs affected our seasonally soft quarter. However, we were able to compensate for the same by virtue of higher volumes and improved utilization. In rupee terms, we reported a total income of INR 554 crores, showing a growth of 0.9% QoQ and about 27.5% YOY. EBITDA including other income came in at about INR 117 crores, which is 21.1% of our total income compared to 21.7% in the previous quarter. In growth terms, EBITDA has grown 11% over the previous year. We have maintained our margins despite continuing to make investments into our new business unit of generative AI business services, which is what I call business startup stage and continues to be in an investment mode. The fast-paced changes one is seeing in the AI space is something we must take head-on as we try to develop and grow our GBS business. The other transformational steps of verticalization and establishing a full sales team in the U.S. and India to drive new sales, which is a departure from the structure we had in place until recently of a hybrid sales team, are also investments we are making for the longer-term health and growth of our business. Our EBITDA margins are after the above investments and continue to be within the guided range of 20% to 22%. This is our 18th quarter where we have performed in line or ahead of our margin guidance. Operating margins stand at INR 92.7 crores, which is about 17.5% of our total income and has shown a growth of 12.5%. Adjusted for investments on GBS, the new sales team, and investments in verticalization, EBITDA and operating margins would have been like the previous year and at least a couple of percentage points higher than what they have been currently declared at. Our PBT for the quarter came in at 69 crores, which is 12.5% of our total income, showing a sequential growth of about 1.8%. Year over year growth of PBT, I would say, is not very relevant as we have certain large non-cash charges related to acquisition in this quarter and the previous quarter. PAT came in at 50 crores, showing a sequential growth of 1.2%. Given the non-cash charges, a metric which reflects the health of our business, our growth and profitability is the cash earnings per share. Cash EPS removes the noise one sees from GAAP accounting for these non-cash accounting costs. Our cash EPS for the quarter was INR 6.16, showing a good year over year growth of 12.6%. Annualized cash EPS stands at about 25% per share compared to the 23% in the previous year. A quick highlight for the performance for the nine months, we reported revenues of INR 181 million, showing a growth of 25% in constant currency. Rupee revenues were INR 1,591 crores, showing a growth of 26%, 25.6%. EBITDA stood at INR 353 crores, growing by 12.6%, while operating margins at INR 278 crores grew by 8.4%. We reported a healthy cash balance, cash and cash equivalent balances of about INR 1,495 crores, with a strong continued conversion ratio of 97.5% of EBITDA. Our DSO continues to be stable at about 84 days. Capital ratios of ROCE at 21.8% and ROE of 14% continue to remain strong, and we continue to focus on these metrics. We have flexed delivery engine with an increased uptick in our utilization levels for the quarter, standing at about 78% compared to the 76.3% last quarter and 76.7% for the same period last year. We have to get the utilization numbers up, and this is definitely a lever available to us, and we are working to get back these to the 78% to 80% numbers that we earlier used to have. Campus grads are slowly getting into billable mode, and this is definitely going to help on utilization numbers. We have reported net people additions in Happiest Minds of about 50. We ended the quarter with 6,630 Happiest Minds. Attrition has seen a small uptick and it stands at about 15.3%, which we believe is more a seasonal phenomenon, and we expect this to trend downwards in the next quarter. Finally, I'm happy to share that on 1st February, we signed agreements to acquire the Middle East Business of PureSoftware Limited. Intention of this transaction is to consolidate existing customer relations in the region along with a local delivery team with capabilities in application development, maintenance, and infrastructure services. Almost all of the business that comes to us through this consolidation will fall within the BFSI vertical and the IMSS business unit. The transport business comes with 90-plus people, a few very good customer relationships, new customer relationships, and a few deep customer relations within some of our existing customers. I take this opportunity to welcome the newest Happiest Minds into our family and now look to expanding on the relationships by taking our capabilities in BFSI vertical, Arttha Banking, and other capabilities into these acquired accounts. Middle East will become a significant contributor over the next year, and we will be making more investments in the region. Talking a little about the future, we aim to close the year with margins to be in our guided range of 20% to 22%. For the nine-month period, we are ahead of this guidance number. On revenues, as mentioned earlier, we are given a forecast, again, not a guidance, of about 30% to 35% growth for the year. Consolidation of PureSoftware and Aureus got slightly delayed in our first quarter, due to which we had a shortfall in the growth numbers in the first quarter. However, as you may have noticed, we have in subsequent quarters done a QoQ growth of 27% and 28%, and to do a similar and better, if not better, number in Q4, and our attempt will be to come as close as possible to the 30% growth number in constant currency that we had set for ourselves. With this, I shall conclude my commentary and will pass this on to Joseph. Over to you, Joseph. Thanks, Venkat. Good morning, everyone. As we reflect on the past quarter, it's encouraging to note that we have maintained our momentum in our transformation agenda even during a period typically characterized by seasonal weaknesses such as furloughs and vacations that result in fewer working days. Despite these, I'm pleased that we have achieved solid revenue growth while upholding our impressive margin profile. This performance reaffirms our commitment to driving sustainable progress and adapting effectively in a dynamic business environment. Product and Digital Engineering Services led the performance with a growth of 28.2% year on year. All our focus markets have reported good setup numbers. Seven out of eight verticals have registered good growth with the exception of EdTech, which is seeing some softness in some subsegments. Our customers rely on us for a distinctive blend of services that encompass engineering, transformation, data analytics, artificial intelligence, cloud solutions, and cybersecurity. With a dedicated team of 6,630 professionals at Happiest Minds, we embody a diverse array of roles, strategists, industry experts, functional specialists, and technology aficionados. Together, we collaborate closely with our clients across various industries to not only understand their unique challenges but also to shape and deliver exceptional value-aligned strategic goals. We continue to make progress in our efforts to build large customer accounts. During the quarter, we have added another $10 million customer, taking the account in this cohort to three. The number of customers in the $3 to $5 million cohort has increased by one to a total of seven. We work with 278 customers, and our average revenue per customer increased significantly during the quarter to $898,000, inching towards the million-dollar mark that we've set as a goal. We have 85 billion-dollar corporations that are customers with more than a billion dollars in annual revenues who contribute to 47% of our overall revenues. To put things in perspective, this count of billion-dollar customers was 60 same time last year. These customer engagement metrics demonstrate our keen focus on customer happiness and effective execution in terms of account mining, farming, and acquiring significant new clients. The verticalization of our industry groups, which we announced earlier this year, is now empowering our sales team to collaborate closely with domain experts within their respective sectors. This alignment allows us to better understand and respond to our customers' needs through our consulting and solution-oriented approach. Our GBS business unit continues to see demand across various sectors, specifically with Hi-Tech for product innovation and user engagement, while sectors like travel, retail, EdTech, and manufacturing are implementing GenAI to enhance customer and employee experience and optimize operations. We continue to strengthen our collaboration with Microsoft and AWS. Leading a strong partnership with Microsoft Azure AI, we've implemented conversational interfaces for Coca-Cola Beverages Vietnam, improving their efficiency. With BorgConnect and NeuroHive, our other alliances in the ecosystem, we're helping build scalable AI innovations for our customers. During the quarter, a global leader in parcel spend management and supply chain planning chose us to develop a GenAI-powered chatbot that simplifies data querying, offering real-time insights and dynamic visualizations to make informed data-driven decisions with ease, thereby improving user experience and driving operational efficiency. With onboarding of a chief growth officer recently, we have put in place a large account strategy targeting new logos of consequence. The team is coming together and has already built a good pipeline. The reported quarter saw some good new logo wins. Some of the noteworthy are for a U.S. logistics tech provider, Happiest Minds is driving their digital transformation agenda and building intelligent conversational dashboards using GenAI. We have incubated strong partnerships with leading hyperscalers and ISVs through which we are innovating, co-creating solutions which our customers need. In the reported quarter, our strong capabilities in the Microsoft Power Platform enabled us to win an engagement with a global MedT ech company to build their engineering platform. We are excited about the opportunity to better serve our clients and differentiate in the market, leveraging the capabilities and reach of the acquisitions we made this fiscal year. Our acquisitions are helping us establish presence in adjacent markets while we are enabling their growth by giving impetus to their pre-sale solution capabilities by enhancing the offerings with our domain and technical capabilities. In the reported quarter, an American multinational financial services company chose Aureus business of Happiest Minds to transform the enterprise content management systems. In another case, a U.S. HealthT ech company chose PureSoftware to provide them infrastructure management services based on the capability of our IMSS business unit. PureSoftware and Aureus, companies we acquired in the past year, have been successfully integrated under one Happiest Minds, and we are together driving efficiencies in sales, delivery, and more importantly, operations. We will continue to work with razor-sharp focus to advance our positioning of services amongst customers on both sides. Enterprises are adopting quantitative risk assessment techniques to prioritize risks and allocate resources. Cybersecurity continues to be a business imperative for our customers. Through our comprehensive offerings in this space, we are helping businesses navigate towards a global regulatory convergence. During the quarter, a Middle East-based global bank chose us to provide risk and governance consulting services. In other updates, I'm pleased to announce that Happiest Minds has been recognized by Great Place To Work as one of India's top 100 best workplaces and as one of the best companies for women in India by Avtar and Seramount. These prestigious accolades underscore our commitment to fostering a diverse and inclusive workplace and our superior execution of these strategies. Let me share my insights on the demand drivers for Happiest Minds. The financial services sector in the U.S. is thriving, bolstered by a robust economy, stable inflation, and a balanced job market. A strong narrative in the banking, financial services, and insurance space, enhanced by recent acquisitions, positioned us well to seize these opportunities. Healthcare and life sciences, now among the top three verticals for Happiest Minds, have grown very rapidly in the past year, and we are building momentum to be a formidable player as a digital health partner for our customers in the areas of personalized medicine, value-based care, and biosimilars. We are also witnessing a positive shift in the retail and consumer products industry with discretionary pressures easing. While demand trends remain stable across most sectors, we have observed some softness in the tech space, especially the Higher Ed subsegment, as customers reassess their business strategies amid disruptions caused by changing student preferences. However, it's encouraging to note that technology continues to be central to their decisions, and we do see more focus on the workforce development subsegment in this space. Our customers are prioritizing key technology areas such as artificial intelligence, application modernization, cloud solutions, transformation initiatives, and cybersecurity, with investment flowing into these areas. I believe this upcoming calendar year will open new frontiers for growth for Happiest Minds due to the combined impact of our four transformation initiatives and an improved demand environment. I'm genuinely excited by the prospects that lie ahead for our company. With this, I conclude my commentary, and, Operator, we can now open the floor for Q and A. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wish to ask a question may press star and one. The first question is from the line of Aditi Patil from ICICI Securities. Please go ahead. Hi. Thank you for the opportunity. Yeah, my question is on the EdTech vertical. In prepared remarks, you shared some color on this vertical, but can you let us know the outlook in top client? The performance in top client has been soft since past year quarter. And also, as of top client, when should we expect recovery in this vertical? Sure. If you look at the previous, first touch the previous quarter and then get into the broader segment outlook as well as what we see coming so for the past quarter, there were two main reasons why we saw a dip in our quarterly revenue. The first was one of our customers, a mid-sized customer, I would say, who had a captive center in India, decided based on their IT strategy to insource all of that work, and so that had a fair bit of impact. The second one was for one of our customers in the K-12 space. We completed the development of their platform, and as a result, the size of the team got reduced because you need a smaller team to continue adding features and supporting the platform. Now, if I look at the broader segment, if you look at the EdTech segment, u can broadly break it up into four areas, Higher Ed, K-12, which is a schooling, professional development, or workforce development. And I'll keep universities as a separate thing because it is an ancillary of EdTech. Now, we've not really done much with universities because it's a very specialized segment. Most of our work has been in Higher Ed, and that's the area that has got impacted significantly due to changing customer preferences, the digital transformation, and also some secular trends around enrollment and costs that the universities are facing. So as part of our FY26 strategy, one of the strategies that we've identified is to leverage some of the strengths that we have in this space to parlay that into service offerings for the professional workforce development, where there's a fair bit of focus and investment that's going just to look at how to upskill, multiskill, and reskill the workforce with all the rapid changes that you're seeing, both in terms of technology and business models. And so that will be something that we will be focusing on closely. The other thing that we're looking at is to see if there are some channels that we can develop to look at the top universities that tend to develop their own platforms as well as take a couple of the leading platforms and be the implementation partner. So these are two strategies that we will, among a few others, that we'll be looking at to get back growth and stability in the EdTech segment. Joseph, if I can just add to that, Ashok Soota here, I think we should also be clear on our expectations from the EdTech market. Even in today's economic times, we have an interview from a lady called Deborah Quazzo of a venture capital entity, and she says EdTech may stay in the slow lane this year as companies grapple with artificial intelligence. The fact is it's been a very high-growth segment right through the pandemic, etc. The good thing for us is that even while this is going to be steady or lower growth rates than perhaps some of the others, we're clearly seeing ourselves well-positioned in verticals where there's a high growth rate, and we are in a position to leverage and take advantage of that growth rate. The first is, of course, as Joseph mentioned, healthcare from virtually nowhere has become our third largest vertical, and we see strong continued growth. We've got a great presence in BFSI, which has also come through our acquisitions as well as some of the developments that we have been undertaking. So one segment will offset the other. We don't want to project that EdTech is going to be a major growth segment for us. Of course, it'll grow and recover from where it was, but if the whole segment is slow, there's very little for you to do to be able to make it as a major growth driver. Understood. Thank you for the detailed color. My second question is about the Arttha Banking platform. So in the previous earnings call, we had mentioned about the strong pipeline or traction we are seeing in the Arttha Banking platform. Can you share how the pipeline is shaping up over here, and have we already won some deals, or are the deal closures in expected lines? Sure. So if you look at last quarter, the growth in the BFSI segment, if you notice, the BFSI segment was the best-performing segment for us last quarter. And I would attribute a big part of that to the Arttha Banking platform because we were able to close two deals, finish the implementation, and the recognition of those revenues is what has led to quite a bit of the growth that we see in the BFSI vertical. Looking at the current quarter and to next year, there are two, three things that are happening. One is the organic pipeline that PureSoftware has for Arttha Banking platform continues to be good, and it should be one of the contributors to our growth and the growth of the BFSI segment during this quarter. We've also taken a strategic view to Arttha, and we've put together a couple of task forces, one of them to look at the market that we want to take it, different markets and use cases that we want to take Arttha Banking into. Therefore, what are the functionalities that need to be added? What is the strategy we need to adopt, and what is the go-to-market that we should be doing? This is in parallel to all the efforts that we are making. The second is we are seeing quite a bit of traction in the Indian market. We've been in discussion with a few of the banks, and many of them are undergoing their digital transformation initiatives, and they're looking for a digital banking platform like Arttha, which will provide their customers with the kind of digital experience that they're used to. And here again, we have quite a few good conversations going on, and we're very. I'll overlay that with the comment we made about the NN team and the Chief Growth Officer. So that team is coming together really well, and the BDMs that we have in India, they've been able to open up a few of these doors. And so we are very excited about the prospect that Arttha brings to the table in terms of non-linear revenue, establishing our BFSI capability because we have our own platform that should make us very credible with customers in terms of our capability in the banking space. So it's both direct revenue and leverage that we get from Arttha that excites us. Okay. Perfect. And can you remind us, for Arttha, is Q3 seasonally strong or Q4 seasonally strong quarter? We have. It's sort of lumpy, and we have seen Q4 to be reasonably strong. So Q3 was good. We are looking at a much better Q4 from Arttha Banking as far as revenue growth is concerned. Licenses have got two elements. One is the implementation service, which goes over a period of time, but a license being a term license, the revenues get recognized on call-off or on closing the transaction. So Q4 is good. Just one more point to add to what Joseph mentioned, mostly recent acquisition or whatever, the consolidation that we did in the Middle East of PureSoftware which has been through many of the large banks in the Middle East. And as part of the market diversification, Arttha today is very strong in East Asia and parts of Africa. We are seeing quite a bit of possibilities in the Middle East, and this consolidation also will help us open up these doors for taking Arttha Banking platform into those customers. Okay. Got it. And so, what is the timeline for completion of PureSoftware's acquisition? We should be done in a few days. In fact, the SPA has been signed. It was more of a transition of business because we had certain common customers, and they had a large presence in the Middle East with about 9,300 people and two very good BFSI customers and relations about nine to 10 of them. So those come onto our roster, and we take it on from there. So closing should happen. Closing in terms of payments should happen in the next one or two days. Okay. So we should see incremental revenues from PureSoftware's acquisition in Q4 itself? Yes. There will be something that will come from them because it is, we share customers, right? So obviously, there is no cross-sell. It will be a lot more of selling into the same customer, consolidating those relationships into the existing customer, and then we'll have to sell to those new customers which they bring in. But yes. Okay. And can you share about progress on the, so we have been focusing on net new deals, adding net new logos. So can you share progress on this? Yeah. So as I stated earlier, Venkat also mentioned, at the beginning of the year, we took a very strategic decision to separate out our business development, our sales team, which was hybrid till then, into farmers and client partners and hunters who would focus on in new logos. And we have Maninder, who joined us as the Chief Growth Officer in August, and he's been putting his team together, and we have most of the team in place, very seasoned sales executives. And what we've done is we've tried to bring in people to align them with the verticals that we have. So each sales BDM has significant years of experience and depth in one vertical, and that would be the primary vertical. And so this team is mostly assembled, one or two more members to be brought on board, and they came together in the November-December timeframe. Very happy to state that we're already seeing a very healthy buildup of pipeline, as I mentioned in my notes at the beginning of this call. And we already have one closure and a couple of prospects in very advanced stage, which should lead to pretty decent-sized revenues. So I think the strategic initiative that we put in place has taken root. It's in the execution phase right now, and we're already seeing output out of this. We had seven new logos cutting across various geos and verticals last quarter, and we expect this momentum to continue into Q4 and into FY26. Thank you. I will join back in the queue. Thank you. The next question is from the line of Prasad Padala from SBI Mutual Fund. Please go ahead. Hello. Yeah. Hello, everyone. Very good morning. So in terms of, I mean, good to know that your comments about the order pipeline, dealings, etc. But any quantitative color, if you can provide, that would be great first. And second, so would that actually translate to a better organic growth for next year? When you say qualitative, is it more from a- No, no. Quantitative perspective. Perspective, or? Yeah. I mean, in terms of deal wins, are they substantially better than over the last three-year average, or is it more in line with what it had been there? As I said, the team came together in the November-December timeframe, and if we have one closure already, a couple of them will surely get closed in this quarter and pretty good size. Apart from that, there's a good, healthy buildup of pipeline because this team right now is focused on India and North America. We decided to take up, because these are two largest geos, and instead of spreading ourselves thin, we decided to focus this team and build a team in these two and implement the strategy in these two geos. Next year, we will extend it to probably Europe. ANZ is too small right now. And if you look at India, as I was saying, there's a huge synergy with Arttha, and in a couple of verticals, we are seeing good traction. One of them is in the BFSI space. We've just gotten paneled by two of the public sector banks, and we are in discussion to both take Arttha to them and provide other services. Additionally, for one of the largest public sector banks in India, we are providing them with managed security services, and it's a pretty large deal, and we are adding additional components to this offering. We're also seeing quite a bit of traction in the industrial and manufacturing space, and in North America, as we speak, there are at least three or four prospects that I would say are in an advanced stage and hopefully should close during this quarter. We have salespeople that are covering Midwest, East Coast from New Jersey, and the Bay Area. So we have coverage across, and we also have brought on board a seasoned BDM in Canada because we see quite a few opportunities out there, and this sales leader has sold into the Canadian market. So in all, I think, as I said, our NN pipeline is looking strong. It's not a number that we share, but I can say that it's been among the best that we've had if you look at just the NN base or the NN part of our business. Got it. Yeah. Joseph, if I can just add to that. Yes, please. There's a good question here, and essentially, if you will notice, we said we had four transformational initiatives taken earlier this year. The one was clearly designed to show growth in the current year, and that is the acquisitions, which has been demonstrated by the results. Now, if you see the other three, Joseph has talked about some of them in length. I'll again re-emphasize what I said in my opening remarks. If you just take GenAI, we've reached a point where we are executing maybe about upwards of 10 or 15 proofs of concept. Maybe 80% of those will get converted into orders. They need not be giant-sized orders, but they can clearly add to a very significant amount in terms of revenue, inorganic growth in the next year, which wasn't available this year because you had to go through the POC stage to be able to complete it. Those numbers are not even reflected in the pipeline as yet because we will include them in the pipeline once we finish the POCs, and we then get a firm indication from the customer that they will go ahead and convert to the larger order, so that's one fundamental area of growth. Joseph has talked about the progress on GenAI in quite detail, both in his own opening remarks and in response to your question, and the third area was, of course, the industry group and verticalization we did. Obviously, you have industry managers settling into new roles, each one taking varying degrees of time to build up their own pipelines, which is progressing. In some areas, it's happened a little faster than the others, and my belief is that in the next quarter, all of these will become major engines of inorganic growth. So that's really the thrust for the next year going ahead, arising out of the changes we made in this year. Understood. Thank you so much. Also, if I may just extend the question, so how much of it is of the improved pipeline? Is Is it a function of the strategic initiatives you're taking, and how much of it is because of the market now looking better? I mean, is the second thing, I mean, the first one is more clear, I think, in terms of how we explain. I'm just trying to understand the second bit, and if you can give some color on that. Joseph, you again. So yes, I know. Both go hand in hand, as you would understand. So it becomes difficult to really pin it out. And as Ashok also emphasized, all of these are working hand in hand. The acquisitions have got us depth, and the Arttha Banking platform, the solutions that's well in BFSI, which is an area that's, I think, showing more signs of growth than others. And the fact that we verticalize and have a BFSI vertical with an IG head and the delivery and sales aligned to it helps us go to market better, right? Similarly, for healthcare, right? We have some leverage that we've got from PureSoftware. There are a few customers in this space getting us some new capabilities, but they're benefiting from some of the capabilities and work that we've done in the healthcare IG, which has an IG head. And we built some really good cutting-edge capabilities working with SCAN and with Happiest Health. So all of this, we're able to take to market. So I would say it's very synergistic and goes hand in hand and kind of acts as a catalyst for each other. That's how I would look at it. Got it. Thank you. Thank Thank you so much. Yeah. That's all from my end. Thanks. The next question is from the line of Vinesh Vala, HDFC Securities. Please go ahead. Yeah, sir. Thanks for giving me the opportunity. My question was on the retail vertical where you see ease in some discretionary spending which is coming in. So can you highlight on that vertical? Yeah, so we're seeing decent traction in two areas. One is if you look at the retail segment in the U.S., especially some of the mid-sized retail companies, which have been a little behind in their digital transformation strategy, things like e-commerce, leveraging analytics, using some of the technologies like beacon and others that allow for personalization. We see these companies undertaking or getting into the next phase of their digital transformation journey with a lot of emphasis on analytics and AI, and so that's one area that we are seeing quite a bit of traction. In the CPG space, I think some of the large CPG companies are customers, or we've signed them up recently, and we've seen that in the last six to eight months, they all went through a little bit of a strategic review at the beginning of last year. And towards the end of 2024, we saw that these reviews were getting completed, organizational restructurings were being done, and therefore, new initiatives started being initiated and executed. And we're beginning to see that reflecting in additional requirements and pipeline. And as you see, for last quarter, we did have the retail CPG vertical showing pretty good growth of around 3% to 4% quarter on quarter. And we expect this to continue. One of the strategies that we'll be playing out, especially on the CPG side of the vertical, is to focus on how do we expand our presence and mine more aggressively in the customers that we have. As I said, we have some of the top, among the top 10, I would say we have four of the companies as our customers, and they're all pretty large. They have pretty large IT spend. There is quite a bit of opportunity out there. We'd like to take a very focused view to our account mining and expansion, which, again, I think our whole verticalization strategy would help by bringing delivery, sales, and domain together to come up with account development plans, account strategies, and to go about it in a very focused manner. Okay. Thanks for an elaborate answer. Another one was on the BFSI vertical, as you told that the recovery is there in the U.S. market. So I wanted to know that among the subsegments, which are the subsegments which are showing the recovery, or is it across all the verticals? And another question was on the margin front that you told that the margin lever utilization, which you would be improving it to 78% to 80% is the range you are comfortable with. So what are the other levers which would be helping us to get the margin? Sure. I'll take the BFSI question, and let Venkat talk about the margin. Okay. So So if you look at BFSI, I would say that the banking and financial services is, I would say, more than insurance is an area, and especially banking is an area that we are seeing more of a propensity to spend. I think the insurance subsegment, especially given what's happened in California, right, they may be a little bit more, I would say, careful in how they would approach it. But on the banking and financial services side, we are seeing, as I said, the growth that we had in Q3 and the growth that we would have in Q4, a pretty big contributor would be the banking and financial services space. On the insurance front, what we're doing is we're taking a very focused approach. We have a few large, we're doing two things. We have a few large customers, and so we're figuring out what is the top strategic imperatives for them because many of them are, again, they're going through what I said the CPG companies went through last year. They're doing a little bit of a strategic review of their priorities, and I think the next six months that should get done, and then they should start rolling out initiatives. In parallel, we're looking at what are the current pain points and how do we really address them in a very focused manner. The other thing we're doing is we've come up with, for some of the smaller insurance companies, we're coming up with a productized service offering where we put together what we call an Insurance in a Box that covers all the way from sourcing a customer to signing them up to getting their claims, underwriting, to putting the kind of 60% to 70% or 80% completed offering and take it to the market. We've had a couple of customers already sign up for this in South Africa, and based on that experience, we are trying to see if we can replicate it in other geos as well. These are some of the things that we're doing in the BFSI space. Venkat, do you want to take the margin question? Yeah. Please. Thanks, Joseph. On the margins, there are quite a few variables going in favor and some of them going against, but let me highlight the big ones. The big one is obviously the foreign currency. It is likely to help us the way things are moving. Second is obviously utilization. Utilization, yes, we have to get it up from the 76% to 77% upwards to 80%. So that's a good lever that's available to us. The third is Arttha Banking. What we have seen is it has got a very positive impact on margin because the moment you call off a license, it's almost all of it is to the bottom line. So it helps us immensely on margins, and that's the way non-linear business works. Now, if I were to give you some of the things which are kind of, I shouldn't say depressing, but let's say the investments into GenAI, we did call out that number, it's about $1.5 million. We are today running at about a run rate revenue of about 24 crores-25 crores for the nine-month period. And it's still, we are investing money. It's about $1.5 million for the first six months, and now it's running at about $1.5 million for the first up to the nine-month period. So that's something that's being subsumed into these numbers. The second thing is we have gone ahead and given pay increases, the variable pay. We have not missed any timelines on that, like what most of the other companies or our peer group companies have done. We have not resorted to any of those pushing things or keeping the numbers at a lower level than what the typical industry expectation is. So the puts are these aspects of investments, the new sales engine, which we talked about. There is a lead lag effect that's also impacting the now in- year margins as we speak. But despite all of that, nine-month period, we have done 22.1% in EBITDA. Like I said, we are giving you both operating margin and EBITDA, and EBITDA is at about 22.1%. We are ahead of the guidance of 20-22, and we would like to end the year within the guidance range or ahead of the guidance range. Next year, obviously, pull out all stops to make sure that we continue to improve margins because consolidation benefits will start showing up. We've had transformational acquisitions, three of them, and PureSoftware, all of them. We will start showing consolidation benefits as we progress. Yeah. Thanks, Venkat. Last thing, can you quantify me the wage impact during this quarter on the margins? This quarter, we have. It is for the senior profile, so it will be about 0.6% if I'm right, if I'm right. That will be the number. 0.6%. Okay. Got it, Venkat. Thanks. Thanks Thanks for the detailed answer. Thank you. Thank you. The next question is from the line of Ruchi Mukhija from ICICI Securities. Please go ahead. Thank you for the opportunity. A couple of questions. This year, we saw large acquisitions taking precedence, which will pull off our growth in a way our organic growth would be single-digit or lagging. So as you commented, the BFSI traction is building. We have put in new teams at work. As we proceed towards next year, you see the organic growth for our business catching up and possibly running to a double-digit trajectory. Is that something you are aiming for? Yeah. Ruchi, the question, if I were to phrase it, you are saying this year's organic growth is single-digit, and next year we would like to—you would like to know what kind of a number that is and would it be double-digit? Is that what the question was, Ruchi? Yes. Do we see organic growth traction improving with a combination of demand improvement and the efforts that the company has put in? Yes. First, I'm not being apologetic about the growth because of this year, I'm not, because we don't split the growth into organic or inorganic. It's growth because this year we have given the base for the last year. On that base, we have grown reasonably well in the current year. Going forward into the next year, this will be the base, and the expectation is to continue the organic growth. We have said that we'll be at least one to one and a half times the market, which is what we have set as a long-term growth target. This is something that we have set out even at the time of our IPO, and we continue to hold on to that, Ruchi. So right now, we are in the planning stage for next year. We'll come back to you after Q4 with what we are seeing. But yes, we are seeing good traction. The new sales engine, the verticalization, the acquisitions that we have made, the consolidation that we are seeing in some of the market spaces, generative AI services kicking in, we should see a decent amount of growth and also aided by what we are seeing in the market. Yeah. Just to add, Joseph, you go ahead, and then I'll add a line or two. Go ahead. Yeah. So this is our message. Just to add, we mentioned about the two things, two engines, right? One is the Chief Growth Officer looking at the net new accounts and also creation of the GenAI business unit. Both these will contribute to the organic growth. Just wanted to mention that. I'll just add, just so that we're not hedging around with our answers, I'd say we'd be disappointed if we don't move into double-digit organic growth next year. But as Venkat said, you'll get more definitive ideas about where we are heading when we've done the plan exercise, which we are in the middle of. But we are well-poised with all the initiatives we are telling you that at least three of the four transformations are actually directed towards increasing organic growth for the next year. Got it. For our guidance, we mentioned we want to land as close to 30% mark as possible. This implies a very steep acceleration in March quarter with furloughs reversing, Arttha platform, a good seasonality in the quarter. We imply that the March quarter would be substantially growth quarter. Is that right understanding? Yes. That's what I said. If you have looked at our quarter-over-quarter, which is Q2 and Q3, we have done 27% to 28%. That's the kind of number that we are going into Q4 and the benefits of some of our movements that we get from the GBS consolidation and the reversals that you talked about in terms of what they see, we did have furloughs. We did catch up quite a bit of that through certain revenue enhancement measures, which obviously will be a base that we have to work on into Q4. But the attempt, I keep saying, the attempt will be to touch that 30%. And as of now, it looks to be about 27% to 28%. Just a clarification, for insurance vertical, you mentioned the L&P we have in fact. Do we have direct exposure to the largest insurer in that geography, State Farm Insurance? Or we are talking general implication on the insurance vertical? Just talking about general implication on the insurance vertical, our customers are more Europe-based insurance companies. That's where we have larger presence, if I may add, and those are the customers that I talked about that we would be among the top five insurance companies in the world, and those are the customers that I talked about that we would be focusing on with very specific strategies. Understood. Thank you and all the best. Thank you. The next question is from the line of Sumeet Jain from CLSA. Please go ahead. Yeah. Hi. Thanks for the opportunity. So my questions are largely around your generative AI business. I mean, it's still very early days, and it's just three quarters of revenue disclosure from your end. But for the last two quarters, we have not seen any material pickup out there. So I want to understand how are you defining the kind of work, what you are doing in generative AI, what all kind of work actually entails in it? Because when we look at Accenture's reported GenAI revenues or order book, there's a substantial growth. So I just want to understand that. Is Sridhar on the call? Yes, Joseph. Yes, Ashok. Yeah. Sure. Yeah. Let Sridhar take this. Sure. Yeah. So one of the things we have done is, because we wanted to very closely track what is purely generative AI, right? There could always be a possibility of a much larger project, which is typically a.NET project or a three-tier architecture, which also could be having a generative AI component, right, and a multi-million dollar, very large RFP. There could be a very small project of generative AI. However, internally, we are very clear of not tracking it. So that way, by creating the GBS as a separate business unit, we wanted to completely focus on the generative AI and the solutions primarily around generative AI. So that way, the revenue that goes into the PDES or IMSS is not at all counted as the generative AI-related projects at all. So that actually makes us purely to track generative AI projects, and that could be. I'm not necessarily saying Accenture is doing it. That's one of the fundamental differences compared to many other organizations, which could be having very large projects with small generative AI component and counting on it. And the second thing is, with any technology adoption, as you also rightly pointed out, and Ashok repeatedly reiterated, many of the customers are actually in the mode of, especially the digital transformation. They wanted to try a few prototypes, and then only they want to move forward. And that's the reason why we repeatedly keep talking about the POCs. That being said, we do have very few customers who are either technology pioneers or willing to take the risk. They are willing to make a little bit more progress compared to the POCs. That's how broadly we are looking at the revenues, and Ashok and as well as Joseph already covered about the small upticks we started seeing, and we surely will see it in the next couple of quarters. Sridhar, you may also want to talk about a little bit of the replicable sales and the fact that many of these are horizontal applications which cut across other industries. Absolutely, Ashok. I think in the previous call, Ashok, I iterated a lot. See, naturally, the market is trying to figure out what they can do with the generative AI technologies compared to any other technology we have seen. Here, the changes and innovations of the new large language models, reasoning models, they're coming very, very rapidly. So most of our customers are trying to solve very similar-ish problems and trying to figure out how things will work out. Hence, the approach we have taken a couple of quarters before itself is to take a problem that we solve for one customer and try to take it to other customers, and in the previous call, Ashok did talk about a research companion where either research organizations or academic institutions where researchers are trying to actually look at what they can do with generative AI to help with their research. So, the second and the last one I'll talk, for example, is most of you will be going to public companies' websites as investors, and there'll be a lot of PDFs that are available on the website, right? So, for example, if you really want to know how it was trending in the last three years or how was specific information one year back, you have to go to the specific PDFs typically are posted on the website. So, we created an investor relationship bot, which actually uses a large language model. And as you naturally can visualize, this is applicable pretty much for most of our customers where a simple chat interface to all the financial information publicly available on a specific organization's website can be conversed against. We also have taken it, and along with Microsoft, we have put it on Microsoft Azure Marketplace so that most of our other customers and new prospects can actually utilize this. So similar to this, we have multiple repeatable solutions that we are doing horizontal or somewhat horizontally in a specific vertical like it you take. Got it. So just to clarify, the foundation work in terms of data analysis, data aggregation, or let's say some bit of a cloud migration to access the GPUs, that part of the work you are not including in GBS, but more in IMSS, right? Absolutely. Absolutely. Absolutely. That's right, Sumeet. Okay. I thought I would just clarify that. We are trying to be as clear on that distinction, but it's becoming a little difficult because just not able to figure out when that handover-takeover happens. But we are trying to do that to the extent possible. Got it. And are you seeing with the launch of DeepSeek a couple of weeks back, are you seeing the inferencing cost to come down materially, that discussion happening with your client base and a lot of POCs probably moving to implementation stages? Any advancement in discussions happening on the back of it? Sridhar, again, for you. Yeah. Sure. I'll take this, right? So naturally, when we started six months back with ChatGPT, which is like a mega model or extremely large model, and as you rightly point out, inference is quite expensive, right? And however, in the last six months plus, itself, industry is constantly coming up with smaller models, right, which are much more efficient. And of course, DeepSeek is still considered as a revolutionary step on the top of the smaller models. So that way, as part of our work, we are constantly looking at smaller language models, which are typically 1.5 billion-7 billion parameters as opposed to the extremely large 175-plus billion parameters models, right? So we already are actually working with our customers on how to make inference much more efficient with smaller language models. And DeepSeek turns into a logical next step. And of course, with all the innovation happening, there'll be many more similar kind of steps. My point is there are scenarios where we use extremely large language models, and there are scenarios where we use smaller language models. And the market already has quite a few, and DeepSeek is a next evolution on the top of it. Got it. And maybe just last question in the interest of time. I mean, obviously, GenAI is being touted as to provide significant productivity benefits to the IMS service line as well as product and digital engineering services. And we saw that one of your larger peers did pass on a lot of productivity benefits to one of the largest hyperscalers. And even you work with them. So I want to understand, are you also passing on these benefits to them, or are you able to retain them? Any thoughts? I can take this. I think Venkat, you should really handle this as much more like a margin-related issue that is really coming on, and I may add a little bit to what you would like to say. Yeah. See, I think when we started this whole GenAI and the impact on the, there are two impacts. One is on the supply and the demand. I think the demand side, Sridhar, has covered in great detail. On the supply side, the expected contraction or at the development stage is between 5% to 10%. How much of that we are seeing in new business, we are beginning to see some bit of that, the ask being, yes, if you're using AI automation, Copilot, and the similar tools, we should see the benefits. So I'm talking about it from a pricing, modeling, RFP-based situation. That's something that's coming up. The second is whenever you are in an RFP mode, typically in the IMSS business, there is an ask of saying because earlier also, there used to be something called efficiency gain that we used to give whenever we start a model for a three year, four year transition of an infra project. There is always an efficiency gain, and frankly, you know what is there out two years, but the third year and fourth year, the efficiency gain is a percentage taken based on certain best guess and estimates. Right now, you have tools which permit you to show that and quantify that when you do your RFP, so two ways to look at it. On the supply side, yes, the efficiency gains are being passed on. In renewal, there is a request. In renewals, rather than request, when you plan out your team structure, instead of 10, it's already 9. And that kind of a thing. But the demand is making up. So recently, what I'm trying to talk about, Satya Nadella talked about, there's a paradox, I think, Jevons Paradox or something of the sort, where he said that the demand will outstrip the constraints on the supply. So that's what we'll see going back many, many, many years back. Actually, Venkat, in simpler terms, the fact is that the margins in the business are not going down because of this, and because of GenAI, the product is the improvement. The product is the improvement because it brings down our costs. Obviously, it leads to a lower price for the customer, but that's not at the cost of our margin. So that's when you say, yes, you've passed the benefit because you've got a lower cost, and now you've passed on that benefit to the customer, and the margin remains the same. In leading-edge applications, which, again, Joseph, Sridhar, and Joseph Anantharaju referred to, many of them are leading-edge applications. We obviously aim for margins which may even be higher than our average margin which we have across the business. It does, Ashok. That was the other point. The bill rates on GenAI services is superior to even our traditional, and I wouldn't want to say traditional, but our PDES, analytics, and related services, digital services, if I put it that way. Yeah. Right. So the margin opportunity is very clear, but does it imply that your revenue opportunity comes down because initially there is a more deflationary environment and probably the Jevons Paradox kicks in after some time where the volumes come in, which will be reflected in your GBS revenues, maybe with a few quarter lag? There again, I'll just take this one again. In all leading applications, you're really seeing the value you're providing to the customer, which they could not have got elsewhere because of the expertise we have built on areas in which we are focusing, doing more and more replicable sales. There's another very interesting thing here. And when Sridhar talked about replicable sales, frankly, the more you do this, you take the same solution to, say, three customers, and we've got many of them even right now on the pipeline. The moment you've done that, your own cost of production comes down far more than the customer could logically have expected. Would this per se have led to reduction in the top line, which is what you're alluding to, not necessarily. It's a little bit of a hybrid here because what you're doing is you're getting more revenue being generated, which would not otherwise have been available, and on a per-order basis, you may say, yes, you've passed on that productivity benefit. It has cost you a little less than that benefit you passed on, and that reflects as a reduction in what could have been the revenue, so that's what the thing is. The net effect is we're not expecting any decline in revenues as a result. We are really saying we're looking forward to very solid inorganic growth, particularly with GBS, organic growth, particularly with GBS. Just to add, Ashok, in all the customers that we've engaged with, at least on the GenAI, I'd say broadly on the AI side, customers, even last two years, anything related to AI, maybe even data engineering, Snowflake, and things like that, Kafka, skills like that, customers understand that these are high-end skills, and therefore, they're willing to pay, as Venkat pointed out. The rates that you get are at a premium for some of these skills, especially on the GenAI side, and all of these engagements have been done at a fixed price, so we do an estimation, and we apply the higher rates, and we also track the margins from these, and as Venkat pointed out, they're on the higher side, and there's no revenue drop-off. Whatever effort that we are expending, we recover that in terms of the pricing that we use. And in some cases, AWS and Microsoft do land up providing what they call ISV for Microsoft's case, like seed funding to get some of these things started. A little bit of that gets offsets the customer's cost. But for us, we get whatever revenue for whatever effort that we put in. Got it. That's very helpful. That's all I had. And thanks for addressing my questions in detail. And all the best. Thank you. Ladies and gentlemen, due to time constraint, this was the last question. I now hand the conference over to the management for their closing comments. Thank you, operator. And thank you all for joining us today. We thank ICICI Securities for hosting this call on our behalf. We look forward to interacting with you. You can reach out to us on ir@happiestminds.com. Good day. Thank you, everybody. Bye-bye. Thank you. Thank you. Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.