Ladies and gentlemen, good day, and welcome to the HCL Technologies Q4 and annual FY 2024 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing Star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Mohta, Head, Investor Relations. Thank you, and over to you, sir. Thank you, Darwin. Good morning and good evening, everyone. A very warm welcome to HCLTech's Q4 and annual FY 2024 earnings call. We have with us Mr. C. Vijayakumar, CEO and Managing Director, HCLTech; Mr. Prateek Aggarwal, Chief Financial Officer, along with the broader leadership team, to discuss the performance of the company during the quarter, followed by Q&A. In the course of this call, certain statements that will be made are forward-looking, which involve a number of risks, uncertainties, assumptions, and other factors that could cause actual results to differ materially from those in such forward-looking statements. All forward-looking statements made herein are based upon information presently available to the management, and the company does not undertake to update any forward-looking statement that may be made in the course of this call. In this regard, please do review the safe harbor statement in the formal investor release document and all the factors that can cause the difference. To you, CVK. Thank you, Nitin. Good evening, everyone, and thank you for joining us for our Q4 and FY 2024 annual investor call. Starting with the business performance, when we started the year, there was cautious optimism around growth in line with the market situation and the backdrop of reduced discretionary spend and slowdown in some industry verticals. Overall, as a company, we are very happy that we responded to the uncertain situation with the much-needed agility and flexibility, and I'm pleased that we've delivered good growth with good control over our profitability. Overall, our annual revenue grew 5% in constant currency year-over-year and 5.4% in US dollars. This strong growth is attributed to both momentum in our services business as well as our software business. The most important highlight for the year, we've translated this growth into even greater value creation for our shareholders, with the Free Cash Flow growth of 27.7% year-on-year. The entire growth came on the back of healthy growth across segments, different industries and geographies, in services business as well as software business. I want to thank all 225,000 HCLTech techies for a phenomenal performance in what has been a challenging year for the industry. Our services business grew 5.4% year-on-year in constant currency, and I think that's the fastest growth in the industry. Software grew 2.3% in constant currency year-on-year basis, and our operating margins stood at 18.2%, well within our guided range. Before I get into details of our performance, I want to share a few organizational changes that we've made, which we've been working on in the last few months. The first was really integrating our engineering and R&D services sales with IT and business services sales. Now we have an integrated go-to-market structure, and this is aligned with the increasing demand of clients seeking strategic partners with comprehensive capabilities across engineering and IT services. This will enable a broader reach, a much broader reach of our ERS capabilities across all geographies, all the verticals, and we believe this will accelerate the growth for our engineering business and IT and business services segment as well. As we do this, we have the following three leaders with role changes as we get into FY 25. Kalyan Kumar, who was the Chief Product Officer for the software business and the CPO and Head of Ecosystems, will now exclusively focus on the HCL software business as the Chief Product Officer and taking it to the next phase of growth. Vijay Guntur, President of our Engineering and R&D Services, will now be our Chief Technology Officer and Head of Global Ecosystems. And with that, Hari Sadarahalli, who's led all our asset-heavy industries within engineering services, will now lead the engineering services business and delivery organization in this expanded role. I wish them and the larger leadership team the very best in the all the new endeavors ahead of them. Coming back to our performance, IT and business services grew 6.2% year-on-year. Engineering services declined 1.6% year-on-year in constant currency. Digital Foundation, digital process outsourcing, and our overall portfolio of digital services contributed to the year-on-year growth. Even amidst the slowdown in discretionary spend, our digital growth was 5.3% Y-o-Y, and now contributes to 37.3% of our revenue. We have a very strict classification of what is considered as a digital revenue, and we have discussed about that in the past conversations. While there was good growth in different parts of our digital business, the one that stood out is cloud transformation and cybersecurity. Both of them had impressive growth, along with growth in our SaaS portfolio. Software business grew 2.3% year-on-year in constant currency. This business has made significant strategic progress by focusing on subscription and support revenue, and steadily growing annual recurring revenue. The subscription and support revenue has grown from 78.8% in FY 2023 to 83.8% in FY 2024. You will see ARR growth slow down on a year-on-year basis, and the drop on QoQ is attributed to decisions we made to discontinue some small parts of our telecom product portfolio. In terms of verticals, our geography growth was led by Americas, the largest of the IT services geographies, grew 6.8% year-on-year in constant currency, followed by Europe, 5.5% year-on-year in constant currency, while rest of the world declined 7.1% year-on-year in constant currency. Our top performing verticals were financial services. We have delivered an extraordinary growth in financial services, which grew at 12.1%, amidst the macro concerns, and manufacturing grew at 9.8%. Of course, enabled a little bit by the ASAP acquisition, and retail CPG grew 8.2% year-on-year. During the year, we made very good additions to our client portfolio. We added 3 customers in the $100 million category. We now have 22 clients in this category. If I go further down the range, we have 137 clients in $20 million category, an addition of 6 on a year-on-year basis. From a booking perspective, we booked $2.29 billion as new deal wins. And just to remind everyone, we call out only net new wins, and renewals are not included in our total deal win numbers. Our annual bookings is at $9.759 billion, which is a 10.2% growth compared to FY 2023. During the year, we had a total of 73 large deals, including 21 this quarter across products and services. Our pipeline continues to grow and remain healthy. A lot of brand transformation work that we've done over the last couple of years has also helped us emerge as the fastest growing brand among the top ten services companies, according to 2024 Brand Finance reports. Talking about a few wins this quarter, most of them are in our investor release, but a few that I would like to call out. A Europe-based manufacturing company selected HCLTech as an IT transformation partner to manage its ERP landscape across SAP and other connected business systems, including SAP S/4HANA landscape. Our ecosystem partnership with SAP is now showing very good results. A Japan-based global medical technology major selected HCLTech as its strategic partner for R&D transformation and innovation. We will provide new product development, sustenance, and digital engineering services to support the client's global design centers and manufacturing sites. This is a very good win in the world's second largest technology market. A U.S.-based manufacturing company selected us to establish a product-aligned IT operating model to bring IT and business together for a faster go-to-market. We will transform the network backbone, underlying commercial applications, and critical business processes worldwide, and leverage AI ML technologies and extreme automation to deliver to this client. On the product side, a U.S.-based advertising and marketing technology service provider has expanded its partnership with HCLSoftware. The advertising company will deploy Unica to deliver data-driven marketing campaigns and services to its clients, reaching millions of customers every month. We also announced a deal, of course, this is a deal for the current quarter, with State Bank of India, for the MarTech platform, which is the Unica platform that we have, the modernized Unica platform, to drive, marketing automation and, end customer experience management, for over half a billion end users. Specifically on GenAI, we are seeing a lot of traction, on AI and GenAI-related opportunities, where clients are seeking realistic benefits. We've had good success building a strong pipeline through success POCs for various clients. We are also channeling our efforts to get people trained on GenAI to ensure we are able to deliver software development in the most effective way possible. We also recently launched HCLTech AI Force, a generative AI and automation platform that powers a dynamic suite of solutions designed to inject intelligence into every facet of software engineering workflows across development, testing, support, and maintenance. AI Force accelerates time to value by transforming the software development and engineering life cycle, delivering greater productivity, improving product quality, and ensuring faster release timelines. Talking about a few wins specific to GenAI, a global top technology company selected us to transform its product validation and sustenance experience with GenAI. A leading financial services provider selected us to migrate its existing machine learning models to new age GenAI platforms for greater agility, improvement, and innovation in service delivery. A leading U.S. telecom company selected us to leverage data engineering and GenAI to automate the data pipeline for analytics and reporting needs of the sales and marketing team for the enterprises, ensuring good governance and quality. In terms of people, our headcount ramp-up continues. We had 1,537 net new additions and added 12,141 freshers in FY 2024, which is lower than last year, adjusted for the market conditions. Our people count at the end of last quarter stands at 227,481. Our attrition continues in the right direction all through the year. On an LTM basis, our IT services volunteer attrition is at 12.4%, one of the lowest in the industry. We continue to win several awards from analysts and advisors as a leader in many services. Notable ones beyond the areas we are well known includes SAP S/4HANA services, digital commerce, hybrid enterprise cloud services, where we were recognized by our clients. Another important one this quarter, HCLTech received Gold Award at the Economic Times Human Capital Awards for innovative hiring and unique practices for our TechBee program, which is HCLTech's early career program. Also, Ethisphere named HCLTech among the 2024 World's Most Ethical Companies. MSCI ESG assessments kept us at a double A rating for a second consecutive year, and for the second year in a row, we are included in the S&P Global Sustainability Yearbook for 2024. Now, I want to talk a little bit about the few key trends that we're seeing in the market. Amidst cautious optimism, enterprises are focusing on specific strategic priorities, such as AI, engineering, and FinOps. While discretionary spending is yet to rebound, overall enterprise IT spending is expected to remain moderate and healthy. Discretionary project-based spending remains under pressure, and AI-related spending is coming at the cost of other areas in the IT budgets, effectively leading to doing more with less, or at least doing the same with less. Enterprises have big plans around AI, but have learned from the cloud migration journey. So the widespread adoption of GenAI, customers are cautious to ensure ROI is not compromised for the speed of execution. Engineering and R&D spend and outsourcing of that continues to grow globally. Enterprises are preferring partners with comprehensive portfolio of IT business services and engineering services, as it offers multiple advantages to them. Like the way we integrated our infrastructure, which is now Digital Foundation and digital business services, led to more integrated opportunities and really created a new revenue stream for us. We believe bringing IT and engineering capabilities together lends itself to unique service and solution offerings, which is going to drive a new set of new momentum for us in the market. GenAI will serve as a growth catalyst for data, cloud services, as well as the tech market. We are making sure that data and related practices have the right offerings and the capacity to address the market demand. It's also important to bring the domain expertise into picture to get the full benefit of this, and we are investing in that as well. Moving to FY 25 guidance. I believe FY25 will be a year of consolidation, both on the demand and supply side. Our clients have been consolidating their technology spends over the last many quarters. We expect them to invest this back into AI and other emerging technologies that drive productivity, resilience, and business growth. This year will also be an opportunity for vendor consolidation, and it will benefit the providers who can scale and deliver the best quality of services. Coming to guidance for FY25, revenue growth, we are guiding for 3%-5% in constant currency. Of course, all of you must be wondering, with the strong exit momentum, why is the guidance 3-5? But there are some finer details on Q1, which Prateek will share. Operating margin guidance is 18%-19% range. We delivered 18.2, and we continue to remain focused on improving margins. However, the guidance for the year remains the same ranges, 18%-19%, as we had in the last year. With that, I will request Prateek to share more details. Over to you, Prateek. Thank you, CVK. Hello, everybody. Good evening, good morning, good afternoon, wherever you are. Hope all continues to be good with you. I'm going to quickly cover the results at a high level in some detail for the quarter, quarter four, and then go into the full year and then go to the guidance and all of that. To start with the quarter overview, HCLTech revenue stands at $3.43 billion for the quarter, 6% up in constant currency terms year-on-year. And services is at $3.1 billion, which is up 3% sequentially, and 6.7% year-on-year in constant currency. We therefore continue to be the fastest growing tier one IT services company amongst our peers. IT and Business Services revenue stands at $2.55 billion, up 4% sequentially quarter-on-quarter, and up 6.7% year-on-year in constant currency. ER&D is up 6.4% year-on-year in constant currency as well. HCL Software is flat year-on-year in constant currency terms. The EBIT clocked in at $603 million, which is 17.6%, which is down about 48 basis points year-on-year. Services margins are reduced sequentially by about 73 basis points and year-on-year by about 29 basis points. The net income for the quarter came in at $480 million, which is 14% of revenue and which was flat year-on-year. To give you a sense of the way the margin moved during the quarter, at a total level, at a company level, margin, EBIT margin reduced by 218 basis points, which was, as you know, caused by the seasonality in the software business, which had an impact of 156 basis points. What you should do is put in a blue suit bag, sir. All dirty clothes put in a blue bag. Sorry, we haven't room for that. Can you go on mute? Somebody is speaking in between. Yeah, so services—sorry. So software seasonality, December quarter being the peak quarters, came down in revenues, and that had an impact of 156 basis points, and the balance drop was in services. On the services margins, the 73 basis points drop is primarily due to the increment. There was an increment that we had called out earlier, but over and above that, given the good year, we had, we went above that to give about 20 basis points increment, equivalent increment for even the E4 and above, the middle and the seniors leadership. Going beyond the increment block that we had placed six months back in July of 2023. So that was the biggest reason. And then there were some seasonal travel and marketing events, which took away about 25 basis points. And the balance was really exchange related, small drop because of the way the Forex currencies moved. Moving on to the FY 2024 overview therefore. The total company revenue came in at $13.27 billion, which is 5% year-on-year in constant currency terms. And software was up 2.3% year-on-year. And the ARR now stands at $1.02 billion, which is increase of 0.7% on a year-on-year basis. Services stood at $11.92 billion, which is 5.4% up in constant currency terms, and we continue to be the fastest growing tier one IT services company for the full year as well. IT and Business Services revenue in that number came in at $9.8 billion, which is up 6.2%, and ERS 1.6% increase in constant currency terms. The EBIT at a company level was $2.4 billion at 18.2% of revenue, and that was an increase of 5.7% year-on-year. On a year-on-year basis, the services margin increased by 11 basis points. The net income for the year came in at $1.9 billion, $1,896 million, which is 14.3% of the revenue and increased by 3.2% year-on-year. In rupee terms, it increased by about 5.6%. Return on invested capital is an important metric we have been focused on. We publish an entire page giving details of that calculation as well. And given our continued focus on the profitability and managing the capital efficiency, the last twelve months or the FY 2024 ROIC stands at 33.8% for the company as a whole, which grew 3.4 percentage points, 341 basis points year-on-year. Within that, services increased by 4.3 percentage points year-on-year to 41.6% now on a last twelve months basis. Even software continues to deliver good ROIC at 16.5%, which obviously has all the investments in the denominator. Getting to the guidance band then, as CVK already pointed out, and you have read, 3%-5% is the guided band, and we've received quite a few questions on that since we published this, so we are just sort of answering that upfront. Obviously the question arises that we are exiting FY 2024 on a strong note and the exit run rate itself sets us well to deliver the lower end of the guidance that we have given. And therefore, let me explain our guidance with some more details. In Q1, as you know, over and above, I mean, there is the usual annual productivity passback that we have on for a large number of our clients. And the same impact would be there this year as well. But over and above the usual annual productivity passback, there is an offshoring impact in one of the large FS deals that we started last March, which is expected to land the Q1 revenues at about -2%, versus the -1.3% that we had in the June quarter of last year. So, you know, -1.3% was the June 2023 quarter versus March 2023 quarter. And this year, we expect June 2024 to come in somewhere around that -2%. Therefore, you know, based on that as the starting point from that quarter, the guidance of 3%-5% that we have given basically turns out to be a CQGR beyond that in a range of about 1%-2.5%. Also, please note that the June 2024 quarter, the Q1, does not have material impact of the sale of the BPO JV with State Street, which we have already announced, as we will be recognizing some revenue as per certain contractual clauses even in the June quarter. As you know, we have announced already that the deal closed on second of April, and this is how the accounting will pan out. The full impact of this divestment will actually start flowing from July 1, 2024. So, I've already talked about the CQGR given the Q1 expectation that has been baked in, it translates to 1%-2.5%. That is the math behind our guidance, and given our strong double-digit growth in TCV of the new deals in the previous year, we are confident to deliver that. And, as far as margins are concerned, we continue to hold the margins expectation at 18%-19% for the fiscal year coming ahead. Cash generation has been a great story. I mean, cash generation, in the last 12 months, we generated, operating cash flow of $2.7 billion, which is an increase of 22% year-on-year. And the free cash flow of $2.6 billion almost was actually up 28% year-on-year. And, as a percentage of net income, the typical ratio that we look at, OCF as a percentage of net income was 143%, and the free cash flow was 136% of, net income. Our balance sheet continues to, grow in its, strength, and, gross cash at the end of March is now $3.39 billion, and the net cash is, $3.11 billion. The cash generation that I talked about was driven by a 5-day reduction in the DSO, the days sales outstanding, which reduced on an including unbilled revenue basis from 88 days in the last March quarter to 83 days in this last, in this quarter that just ended. From a shareholder perspective, on a payout perspective, I mean, the EPS earnings per share came in at $56.86, which was an increase of 5.6% year-on-year. And the board has declared an interim dividend of INR 18 for the quarter, which brings it to a total of INR 52 for the full year. And, given that, EPS is $57.86, that is, almost, 90% of the total for the year. The record date for the dividend is 7th of May, and the payment date would be 15th of May, as per the regulations. So we continue to pay out, you know, in the range of 87, 88, 80, 90%, which is obviously much higher than the 75% minimum 75% that we had mentioned about 2, 2.5 years back. Well, I hope that's all I have for now, and moderator, over to you for Q&A. Thank you. Certainly, sir. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. The first question is from the line of Kawaljit Saluja from Kotak Securities. Please go ahead. Hey, hi. Thanks. Hi, good evening, everyone. You know, I have a couple of questions. The first question is for Prateek. Prateek, I'm just trying to understand the math that you gave for revenue decline in June quarter of 2%. Now, let's say if you have a mega deal, let's say $600 million, you know, over a period of 5 years, so maybe like $120 million-$125 million of revenues. Even if that shifts offshore, I mean, should it lead to such a big swing in a quarter, you know, just from offshoring? Yeah, are you asking the second question now, or...? Yeah, I mean, I can, I can go ahead and ask the second question as well. The second question relates to, you know, the deal wins. Now, if you look at FY 2024, if I strip off, the contribution from, Verizon, then the deal flow actually in FY 2024 has been quite moderate, and which is a little bit counterintuitive, because, in a challenging environment, you have longer tenured, deals that, normally flow, flow through. So your nominal TCV should, ideally look, good, whereas actually for you it has been deteriorating. So is there anything related to the competitiveness or anything that you're basically seeing in terms of win rates that are different? And the final one actually, is for, CVK. CVK, I'm just curious about the change in the org structure or rather integrating ERS with IT and business services. Because, you know, if you look at ERS, historically, the decision maker in ERS has been your vice president of engineering or the product owner, whereas for IT, it is the CIO or the business owner to whom you are basically selling those services. So when you're integrating the sales, right, who's the decision maker, actually? You know, has the decision maker from the client changed for you to integrate, you know, ERS and ITBS sales process? Okay. So, let me take, you know, maybe the first two questions, and then, CVK might have some additional comments and of course, the third question. So Kawaljit, see, the thing is, you know, for these large deals or any deal for that matter, there is a fair valuation that is required by the accounting standards, which is what we do. And, therefore, for the period that the work is being delivered only or predominantly on-site in the high-cost, geographies, there is revenue which gets allocated to that period, more than proportionately. It's not a straight line. And also, when the work moves offshore, then the revenue for the offshore part is proportionately lower than the straight line method. So that's the basic, math. I don't want to sort of go deeper than that, but hopefully that gives you the answer why that is a big impact. And this is a very large deal, as we seem to know. The second question is, you know, I'll start with... I think you cannot really strip out one large deal and start looking at numbers that way. I mean, all said and done, you know, we delivered almost a total of $10 billion for the year, which is an increase of 10%, and that's the only way I would suggest to look at it. And, you know, maybe CVK would want to add a few things on top to answer your rest of that question. So over to you. Yeah. Kawaljit, on the TCV and the tenure or whatever duration, we did not see any change. The large deal, of course, it was a six-year deal, but other than that, the large deals have mostly been a three-year tenure, and this, whatever, $9.8 billion has a mix of small deals and large deals, and large deals are, I mean, average will be 3-4 years, and small deals are a much shorter duration. And all of this is net new. Renewals is usually where you tend to do a 5-year, and we don't include any rate card and all those things. So, we think the booking has enough momentum. Especially what we have done in Q4 will have a good execution in the coming quarters, so that should help us. Now, coming to the more strategic question on organization structure and the integration of IT and engineering services from a sales perspective. If you look at the TMT segment, telecom, media and tech, in most large organizations, the CIO is really part of a overall CTO organization. And there is lot of IT functions are managed by the platform organizations, and it's a part of that decision-making hierarchy. So we see a lot of joint propositions in this segment, which will really help us first of all have a much bigger reach and help us to kind of sell a little more differentiated solutions in this segment. When you look at the asset-heavy industries, of course, CIO is making a lot of decisions on IT, but a predominant amount of tech spend is really happening outside the CIO organization. Like the head of manufacturing, head of supply chain, the IT/OT integration programs, the IoT programs, digital manufacturing, a lot of that, while they are engineering heavy, but there is a significant amount of IT landscape which supports it, and especially in a cloud kind of operating model, the decision making is much, much broader. And also you look at in the other segments where we don't play, for our engineering services, like, lot of service-led verticals, like media, retail, and a lot of these organizations have the marketing organization, is the CMO spend is not something which we have targeted in a big way. But given a lot of capabilities of how we are present in the CMT segment on the CMO propositions, we think we can make a greater impact in the service-led vertical through this integrated offering. So we've been thinking through this for maybe last two years, and, we've done a few verticals in the middle of last year. And, and now all the verticals are joint integrated go-to-market motions. You know, but CVK, you know, if you, I mean, I think fair point on the high tech and media, but let's say if you look at something like an auto, I mean, you know, what will the middleware, or let's say, you know, consolidation of ECUs into DCUs, you know, what has that got to do with what you are doing on the ERP or, you know, enterprise IT side, actually? Yeah. In fact, automotive is a classic example where combining this is a much greater value proposition to our clients. Because, if you see even the most hot segment in automotive is really like the most of the NVIDIA GPUs, almost 50% have been sold to the private instance of AI, and half of that has been sold to the automotive segment. So which means you need to build the entire data stack, you need the entire data engineering. There is an underlying IT stack. All of that is not really under the CIO organization. In fact, we believe we can capture greater IT and engineering spend by a much more integrated proposition in verticals, and automotive is definitely one of the top segment there. Got it. Thank you so much for taking my question. Thank you. The next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead. Hi, thanks for taking my question. My first question is with respect to the offshoring of the large deal. Just out of curiosity, isn't this something that should be part of, part and parcel of the normal business course, every year in terms of deals moving from on-site to offshore and impacting some amount of revenues? Is it, like, materially different than what you have seen in the last two, three years, which is why you're calling it out and, kind of an impact on your guidance for the next years? The second question is on your medium-term outlook of margins of 20% on the upper band that you had shared in the past. What kind of revenue growth is required to hit that? Where are we in the journey of our talent pool in terms of, you know, incorporating more of freshers and improving the pyramid? Where are we in that journey? How much of scope is there to improve the cost structure to be able to hit that 20% mark? Thank you. Thanks, Gaurav. So I agree with you, it's not something completely out of ordinary. It is business as usual in any normal quarter. There would be some deal like that happening pretty much all the time. The difference and the reason we called it out is simply because it is this quarter, which is the June quarter, which has traditionally been a weak quarter, which is the reason I called out the numbers from last year for the same quarter. So it happens to be on top of that. And second, obviously, it is a big TCV number, and it does have a larger than most other deals kind of a thing. So those are the real two factors which lead to calling it out. To be honest, you know, I would rather tell you, you and all of you and all the investors upfront, rather than you coming to find out next quarter when I declare the results. I think it's a material fact which helps us explain the guidance that we have given. So that's the sum and substance of it, Gaurav. Okay, on the margins, of course, our aspiration continues to remain 19%-20%, over our aspirational margin range. But this year we are forecasting it to be 18%-19%. If you look at the overall cost structure and the supply chain of our talent, we had almost doubled our fresher hiring from FY 2021 to FY 2023. I think 13,000 to 27,000, roughly, those are the numbers. But this year, the numbers reduced to 12,000. And as you know, it's a proportion, it's very linked to the growth. So I think, growth is going to be an important thing when the discretionary spend is back. I do think, that is the time when the fresher hiring will again pick up, and that will continue to create a tailwind for margins. As we had indicated, this is a long-term journey. We need to have a sustained focus on, shaping our, cost structure. And this is a journey, and we are, we are... Obviously, there will be some moderation based on the growth that happens, every year. And, last year, growth was much lower than the FY 2023 growth. I think that has some impact, but I think the trajectory and the aspiration and the momentum and focus on this continues. Thank you, CVK. Thank you. The next question is from the line of Ravi Menon from Macquarie. Please go ahead. Thank you very much. Just on the guidance again, you know, last year, if I look at your IT business services was almost as flat QOQ CC. ER&D got declined, and, you know, we talked about how some large programs have got terminated, and we will be back to growth in that, and we were. And even the year before that, IT business services and ER&D had actually a decent Q1. So struggling a bit about how we can get to this low end of the guidance, you know, and the -2% in Q1. So, Ravi, are you, are you talking about annual? What is that you said, IT business was flat? The QOQ, CC growth, if you can. Q1 FY 2024, if I recall right, and that is, you know, just about flat QOQ, right, IT business services. ER&D had declined by about 5%. Is that correct? But that was due to some deals that we had, I think, in high tech, that ramped down. But overall, you know, that shouldn't really recur, right? Yeah, I mean, I think we have done a forecast based on where we are in Q4 and how Q1 will pan out. I wouldn't be able to exactly compare the drop in Q1 of FY 2023 and what were the drivers and what are the drivers for this. But generally, I mean, of course, ER&D was an outlier in Q1. I don't think with looking at a similar situation we will do better. But I think on IT side, we will see a drop. So collectively, that's where the numbers will land. Right. And the other thing is, overall, the deal tenure, you're talking about the deal tenure being three to three years mostly, except for, you know, the very last deal that we won in communications, which is 6 years. Overall, if I take a 4-year kind of average, you know, we are, we should be looking at adding $2.5 billion, more or less, you know. And with the revenue runoff, even if we take that to be 10%, which I think is on the higher side, because typically, I think, you know, retention rates are much better than that. But even then, we should be adding, you know, $1.2 billion in revenue. That should be a 9% growth year-on-year. I'm still starting to understand where the headwinds are. Is the environment getting a lot worse compared to where we were this time last year? Or are you worried that it might actually get a lot worse? Yeah. So, okay, fine. I think you crunched a lot of numbers, but see, first is the runoff is of two categories. One is there is some productivity benefits, which is year- on- year, that has some declining characteristics. And the second one is in the existing book of business there are a lot of programs that teams are working on, and based on clients' budget prioritization, some of that runs off. So we have assumed the same level of runoff that happened in FY 23, FY 24, we've extrapolated that to be happening in FY 25. So I think you will see some kind of logic which will moderate some of your numbers. Of course, Verizon contributed to almost 20%-23% of the booking. That was 6 years. I think last quarter what we saw was more 3-year ten-year deals and a good mix of large and small deals. But general trend would be a 3-5-year kind of window. Now you cannot extrapolate, it's all net new wins, but the ACV of this will have to be offset with a lot of project spend, which projects come to a conclusion. So I think all of this math will eventually work out to the 3%-5% guidance, and with the State Street divestment as well being factored in. Thank you. And one last thing, on the software products, that was up 5% year-on-year last quarter, but now we are flat year-on-year. You did speak about a telecom product being divested, but apart from that, anything else that could cause this to go down materially? No, I think, I mean, we had a $13 million drop because of the decision that we made a few quarters back on discontinuing some of the products, and that had a $10 million impact on the ARR. That's the only thing that's visible. Otherwise, I think we, we've had a good growth in the software business. It is the strategic direction and all the changes that we, we initiated, all of that is kind of panning out as planned. We are happy with the progress that we're making on that front. And as you note that we're also, at the same time, we are looking at converting a lot of perpetual to term licenses. That also saw a good uptick from 79% to 84% or 83%. So I think we are progressing on all the levers quite well. Thank you. With the offshoring query, wouldn't we see a bit of, at least, a margin improvement? Should we expect that next quarter? Yeah, I think in a big portfolio, there are lots of gives and takes, so I think all of that is factored in an 18%-19% guidance. Thank you. Thank you. you. The next question is from the line of Vibhor Singhal from Nuvama Equities. Please go ahead. Yeah, hi. Hello, sir. Thanks for taking my question. And that's a very solid performance in this quarter, though I think we're all kind of a bit disappointed with the guidance. But yeah, I think we execution quite well. But just very quickly, just one last bit on this project offshoring. So, I mean, one is- Sorry to interrupt, but the line for you sounds muffled. If you could please use the handset mode- Yeah. While speaking, sir, it would be better. Yeah, sure. Is that better now? This is much better, sir. Please go ahead. Thank you. Yeah, sure. Sorry about that, sir. So, so again, just harping on that, again, offshoring, the part. So probably, I mean, as I think a lot of people have asked before, and this generally should be business as usual, in a normal course of business. But if it is as big as to be called out separately and impacting the growth for the full year... So one, I mean, any other project that you see in our portfolio where you could probably, I mean, similar kind of negotiations are happening, or they, given the environment, they could run the risk of a similar kind of runoff? And secondly, in the overall scheme of things, I mean, if the impact on revenue is that big, wouldn't it also help our margins as well? So, I mean, do we, I mean, giving the guidance by saying, does that mean that there could be some at least, there should be at least some benefit on the margins front, if we are losing out on the revenue part? So I think, if you have a mega deal and, if you have done a lot of, people transfer and, year one revenues are higher and then when we convert it to a delivery model, which is solution for the client, there will be a drop. And of course, one large deals is kind of impacting from March. And, the other large deal that we've signed is, of course, Verizon, which will have its impact sometime towards the end of end of this calendar year. So all of that we have baked in into the numbers. Right. And my first question, any other deals where you think this could, a similar risk, stands or, there could be similar kind of runoffs? No, I don't think so. I think generally, if you sign a mega deal, I think some of this is to be expected. Okay. And we do hope, I mean, there are a lot of good pipeline, and we do hope to sign mega deals this year as well, given the overall pipeline. And, some extent it will compensate, but that will happen as the year progresses. Vibhor, I would just like to, you know, that word that you used, risk. These are all predetermined- Fair valuation is the accounting term for it. So these are not risks that are transpiring or a run-off, that's the other word we use. It is not something which is depleting from the earlier plan kind of a thing. It is very much a part of the plan, as you yourself mentioned, and, I think, Gaurav mentioned earlier, these are business as usual. These are known in advance. It is just that there is a time period between, the work that gets done on site, predominantly, and then at a certain point in time, it, gets offshored, or predominantly offshore. Depending on the size of the deal, and the timing of it, you know, it could be material to the overall company's numbers. But the guidance that we are giving you is for a total year, as we do every year. And we have a good solid track record to sort of deliver on the guidance, which obviously we want to maintain. And that's the spirit in which we give the guidance, not everybody does, as you know. So we are giving you the guidance based on, you know, things which are pre-planned and predetermined by the accounting rules. So there's no surprise in it, is all I'm trying to call out here. Take your point, sir. Get your point. I think it was more a surprise to us than to you. Completely take your point. Just my last question to CVK. CVK, on the tech vertical, I think this year, I think most of our verticals have done quite remarkably well. It's the tech vertical which has kind of dragged the overall growth down. What is the outlook on that vertical? What was the re- I mean, what was the overall things that you saw or weakness, the reason for the weakness this year? And do you see that changing next year, or do you think it's gonna be a more of a drag segment this year as well? So I think, our tech vertical is a very concentrated portfolio. If you take the top 10 customers in the tech vertical, I think they will contribute to a very large percentage of revenues, more than maybe 60%. And these are obviously very large tech platform, companies. And last year, definitely there was a significant pressure to, cost reduction and efficiency across most of these customers. And as we speak, we think, we see the pipeline is, looking better. I do think a lot of the tech companies are, investing, especially in more, R&D kind of work. And, we expect this vertical to grow in FY 2025. Got it. Got it. Thank you, sir. Thank you for taking my question, and wish you all the best. Thank you, Vibhav. Thank you. Thank you. We have the next question from the line of Surendra Goyal from Citigroup. Please go ahead. Good evening, everyone. CVK, if I understood correctly, you mentioned that generative AI spends are possibly crowding out traditional spending, and there is a negative impact. Given that GenAI projects are relatively small at this stage, would that mean that the net impact of this trend from your and IT services perspective is a net negative? How would you really think about this? I think GenAI has two dimensions, of course: the efficiency dimension, which from our perspective, the biggest opportunity in the software development, product engineering kind of areas. And second is the business or vertical use cases, which starts with PoCs and, based on the success and confidence in PoCs, they will scale into larger programs. At this point, on the first, software development efficiency, that is where we have a head start with our AI Force platform. I mean, Microsoft also recognized the effectiveness of this platform in deploying Copilots, and how we can deliver an end-to-end efficiency in an effective way. So we are looking at this as a way to gain more market share in the software development large programs in existing clients and new clients. We have the secret sauce of how to get this efficiency done in a predictable way, based on a number of internal and client programs that we've done. So I think it's more of using generative AI as a differentiator. Of course, it's a capability available to everyone. But given our long heritage in software engineering, we had built significant capability in using AI in product engineering. Now, the same platform with some more augmentation is super effective for large software development shops. So that's the first piece. I think it is more about gaining market share with the differentiation that you can bring and how well you can execute to that proposition. The second one is really still POCs. We have not seen any large program. The maximum deal size is under $10 million in any of these POCs and programs. And I think it's gonna take some time for those programs to scale because the results of the POCs are, of course, there is some exciting benefits that will accrue out of this. But to really get it operational at an enterprise-wide level, it needs a lot of other things to be streamlined, including your data architecture, the security, whether you want to do a private AI stack or you want to do hyperscaler, and do you want to customize an LLM or you don't want to customize? Whether you are willing to take the liability or some of the providers are willing to take the liability. So there are many intricate issues, which is going to take some time to kind of, find the right balance and right solutions. So I see only the POCs continuing to increase, and it will pick up slowly. But I think the efficiency paradigm is where we will really make a big impact in the short term. Yeah, so, Prateek, that that's helpful. But my question was more on the interplay of generative AI and discretionary spend that you spoke about. Like, this kind of explains how generative AI can help. My question is more on why, like, what is the net impact of these two things? I think, see, any generative AI program brings a lot of surround spend to the higher priority levels. So I think it will cannibalize some discretionary spend, but it also paves way to some newer areas where the client should put more emphasis on. And data is number one, and cloud migration or repatriation, both are also getting a little more attention due to GenAI. So I think these two or three areas definitely has positive effect, but of course, they will try and look at other areas to optimize to put money here. So that's why we have assumed the same environment as FY 2024 and FY 2025 as we plan and guide for this year. No, that's helpful. Just one quick question for Prateek. So Q1, you kind of explained the, like, minus 2% as a possible likelihood. Even the second quarter with the State Street impact, right? And the fact that your deal flow has been in the $2 billion range, and if one assumes that Verizon ramp-up is largely in the base, then even that quarter looks tough. So is the guidance more back half ended this year? Just wanted to understand that. Generally speaking, Surendra, yes, because Q1 and Q2 have already called out these two factors. But, it is key to remember that we did book $2.3 billion this quarter, which will start playing out, some in the next quarter, and definitely all of it in the September quarter. So, and we'll continue booking, hopefully around that $2 billion mark that we have been doing for a long time now, and hopefully keep on increasing little bit, as we go along. So, it's a running book of business, and just because we are giving a full year guidance, and we wanted to explain that in detail, we typically do not ever give you a quarter's guidance, as you know. The only reason we mentioned that is to explain the guidance, like I said before, and also because we did not want you to get that surprise post-facto. I would rather tell you beforehand. That's much appreciated, Prateek. Thanks a lot. Thank you. Thank you. The next question is from the line of Ankur Rudra, from J.P. Morgan. Please go ahead. Hey, thank you. So you say, you know, I know we've discussed this to death so far in the call, but just taking a step back, 1Q is weak, we get it. But overall, you know, you're starting, and you've had a very good year. You've got great momentum and good signings. If I just take a step back and just look at the full year, FY 2025, FY 2024, why does it seem like your commentary and guidance suggests that 2025 will be a weaker year than 2024, given how good, good things end the year? So Ankur, at this point, our guidance is 3%-5%. Definitely, there has been a learning from how the FY 2024 transpired. We came off a very good year in FY 2023, so there was a little more optimism, and we factored some softness in the environment based on what we saw by end of 2022. But what panned out was much, much higher. Now, we factored all of that, a similar trend in FY 2025. So, I think it's the vantage point with which we entered FY 2024 and what we are entering FY 2025 does have an impact on this. At this point, I mean, obviously, 3%-5% means the growth is gonna be lower in FY 2025 than FY 2024, assuming the environment will be the same. I mean Okay. You know, just the number of questions on this, guidance, I mean, I was resisting, but I'll come out and say it. You know, there's only one other company which gives guidance like we do, and our numbers are kind of- ... better. And, compared to most others, I think we would still be- we have been, at the top end of the growth, amongst the, tier one players in FY 2023, when you look at the services growth, 15.7%, I think. And then last year, FY 2024, again, we are, at the top, at 5% total and 5.4% in services. Even with this, the bottom end of this range would be higher than most others. So I don't, I don't want to it's, it's not the end of the world. Come on! It's, it's lower than what you were expecting, I know. It's, we'll try to explain it, in the detail that we have. But, yeah, we- we are just starting the year, and we'll see where we go. Absolutely. Thank you. Appreciate the color and the candor. Just one clarification on the guide. I think from what I can understand, you've not baked in any discretionary spend or R&D spend recovery in the guide now, versus before? So, Ankur, in every year there is some amount of runoff and some amount of backfill that happens as well, right? It's not that, see, discretionary spend, let's say from 100% reduces to 90%, that can have an impact on growth rate, significant impact on the growth rates. So it's not that we are assuming there will be no discretionary spend. I mean, we are saying there is a similar pattern that we saw. Of course, the industry clients, that might vary, but we've taken the total quantum of existing book of business where clients, reduce the spend due to business prioritization. It's a very, very involved exercise. We've done that for the last four months, and we've factored, a similar, proportionate number in this year. But that does not mean that there is no discretionary spend at all. I mean, there are lots of things which keeps happening. And, as you would know, in any year, the book of business that we have is not 100%. I mean, maybe 70, up to 70% is where we have firm booking, order book flow through, but there are a lot which happens during the year. And, some of that is definitely there in the guidance. Okay, understood. Just building a bit more on the last question that Surendra asked. If I just bake in the 2% decline in 1Q and maybe a softer 2Q because of the State Street ramp down you're highlighting, the math for the upper end of the guidance seems to be on the 3%-4% range for the second half. Is that sensible to you? And can you comment about it, is the second half heavy guidance? Yeah, I mean, Ankur, I think if you look at our trajectory in the last four years, I think we start Q1 very low and Q2 picks up, Q3 peaks, and then Q4 moderates. That's the kind of trajectory that we've seen. And all the pipeline and the bookings that we expect, I see a very similar, similar trend this year. Okay, thank you. Just last question. You know, you've got great visibility in software and services given your portfolio. So sorry to interrupt, but we have reached the end of the question and answer session. Thank you. We can take one last question and then close the call. Sure, sir. Ankur, you may proceed with your question. Okay. Thank you. Appreciate this. So my question was, you know, you can look at both sides of spending, a wallet for your customers, software, services, and even hardware. From your perspective, do you think generative AI is helping software spending and relatively crowding out services spending right now? Because we can see generally software parts of most, you know, global peer portfolios are doing well. Services under a bit more pressure. What do you see, given what you see on both sides? I think software vendors are able to get away with the significant price increase, which customers are left with no option but to kind of agree to this, the increase in price. And obviously, I mean, then they look for efficiencies elsewhere. So either if you are in a large, if you have a large footprint, customer expects more for less. And in some areas where they've not really outsourced, they tend to outsource more. So that's the reality. Even if you say the overall IT spend is growing at whatever percent, a significant percentage of growth, that incremental dollars is because of the inflation in the software costs. So that's just additional color that I can provide you. Super. Thank you so much, and best of luck. Thank you, Ankur. Thank you. Ladies and gentlemen, we will take that as a last question for today. I would now like to hand the conference over to Mr. C. Vijayakumar, CEO and MD, for closing comments. Over to you, sir. Yeah. So, thank you, all of you, for joining the call, and a lot of interesting questions. As we have delivered industry-leading growth in FY 2023 and industry-leading growth in FY 2024, we continue to remain very optimistic about our differentiated portfolio and the balanced mix of services that we have, and some of the significant organizational changes that we've made. All of that, we expect to really offer very well for our services business. Our stability and increasing growth in software also continues to give us confidence. From, of course, the guidance for this year and the mid to long term, I think our business is getting more and more stronger. The mind share for HCLTech in the G2000 category has significantly catapulted, and our overall leadership position in the industry is very strong. We expect all of this to continue contributing to healthy growth and market share and mind share for us. Thank you for your support and look forward to talking to you on the next call. Thank you, everyone. Thank you, everybody. Thank you. On behalf of HCL Technologies Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.