Ladies and gentlemen, good day, and welcome to the Infosys earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Mahindroo. Thank you, and over to you, sir. Hello, everyone, welcome to Infosys earnings call for Q1 FY24. Joining us here on this call is CEO and MD, Mr. Salil Parekh, CFO, Mr. Nilanjan Roy, and other members of the senior management team. We'll start the call with some remarks on the performance of the company for the quarter by Salil and Nilanjan, subsequent to which the call will be opened up for questions. Kindly note that anything which we say that refers to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risks that the company faces. A full statement and explanation of these risks is available in our filing with the SEC, which can be found on www.sec.gov. I would now like to pass it on to Salil. Thanks, Sandeep. Good evening and good morning to everyone on the call. Thank you for joining us. We had a strong quarter in Q1. Our Q1 growth was solid at 4.2% year-on-year and 1% quarter-on-quarter in constant currency. We had 21% growth in manufacturing, 14% in life sciences. Our Europe region grew by 10%. Our operating margin for the quarter was strong at 20.8%. We generated a robust free cash flow of $699 million in Q1. Our large deals value for Q1 was $2.3 billion. 56% of this was net new. We had one mega deal win in Q1. Our value of deals for financial services was 50% of the overall large deal value in Q1. We announced a mega deal of $2 billion value after the close of Q1 and before our results before today. With our strong large deal and mega deal wins, we are building well for the future. Our pipeline of large deals is strong, and we continue to have mega deals in our pipeline. We are delighted that Topaz, our AI and generative AI platform, is resonating well with our clients. We are working on 80 generative AI projects for our clients at this time. The work we are doing encompasses large language models for software development, text, document, voice, and video. Internally, we have developed generative AI tools using an open source model for software development. We are working with open source and proprietary generative AI platforms and models. We have trained 40,000 employees on generative AI. We see opportunities for new work and for productivity improvements through this technology. All of these elements are available within our Topaz set of capabilities. We see this area of generative AI and Topaz being really transformative for our clients. As we look ahead with our large and mega deal successes and our strength in cost, efficiency, automation, and consolidation, we feel confident. In the short term, we see some clients stopping or slowing down work on transformation programs and discretionary work. This is especially so in financial services, in mortgages, asset management, investment banking, and payments, and in the telecom industry. We also see some impact in the high tech industry and in parts of retail. Even as we've won two mega deals recently and have a strong pipeline of large and mega deals, we receive revenue from some of these and other large deals towards the later part of our financial year. Keeping that in mind, we are changing our revenue growth guidance for this financial year to growth of 1%-3.5% in constant currency. As a consequence of our mega deal wins, overall traction and cost efficiency, automation, and differentiated digital cloud and generative AI capabilities, we are well positioned for the medium term and especially towards the end of our financial year and the period after that. We have launched a broader and comprehensive margin expansion program. The program will work across five areas: pyramid efficiency, automation and generative AI, improvements in critical portfolios, reducing our indirect costs, and communicating and deriving value across the portfolio. Our senior leadership is mobilized on this. We're working on this program with our clients, our employees and partners, and we're taking steps for the short, medium, and long term, while keeping the overall strategic direction of the company in mind. We have an ambition to improve our operating margin in the future periods. Our operating margin guidance for the financial year remains unchanged at 20%-22%. With that, let me hand it over to Nilanjan. Thanks, Salil. Good evening, everyone, and thank you for joining the call. We entered FY24 on the backdrop of uncertain macroeconomic environment, with clients reassessing their IT spend and continuing to focus on cost and efficiency programs. Q1 revenue growth was 4.2% on a Y-o-Y basis in constant currency. Sequentially, revenues grew by 1% in constant currency and 1.4% in dollar terms. Operating margin for Q1 was 20.8%, 20 basis points lower sequentially. This was primarily due to a 70 basis points of benefit from cost optimization, including utilization, automation, which was offset by a balanced 90 basis point impact from employee-related costs, including higher variable pay, promotions, et cetera. Client metrics remained strong, with the number of 50 million clients increasing to 79, and $200 million clients at 15, reflecting our strong ability to mine top clients by providing them multiple relevant services. Headcount at the end of the quarter stood at 336,000 employees, which is a decline of 2% from the previous quarter. A substantial portion of attrition has been backfilled by training and reskilling existing pool of talent and deployment of freshers. Consequently, our utilization, excluding trainees, improved to 81.1%, which has further headroom for growth. We will calibrate the hiring for FY24 based on available pool of employees, growth expectations and attrition trends. Free cash flow for the quarter was robust at $699 million, and the conversion to net profit for Q1 remained strong at 96.6%, led by strong collections. DSO increased by one day sequentially to 63. Consolidated cash and equivalents stood at $4.5 billion at the end of the quarter. This is before the payout of final dividend that happened in the first week of July. EPS grew by 6.6% in dollar terms and 12.4% in rupee terms. Yield on cash balance was 6.71% in Q1. ROE increased to 32.8% in Q1, a 1.8 increase year-on-year, which is a reflection of our strong cash generation and capital allocation policy. Large deal momentum continued, and we signed 16 large deals in Q1. TCV was $2.3 billion, with 56% net new. three deals each were in FS, EURS and communication, four in retail, two in manufacturing, one in life sciences vertical. Region-wise, this was split by 11 in America, four in Europe and one in ROW. Coming to vertical segment performance, financial services vertical witnessed continued softness in areas like mortgage, asset management, investment banking, cards and payments. Large and super regional banking clients in U.S. have been resilient during this quarter. Large banking clients are focusing on vendor consolidation, cost takeout, and self-funding transformation programs. Many financial institutions are looking at outsourcing their non-core business. That includes taking over existing employees across technology and operations. While delayed decision-making is impacting the vertical, our recent deal wins and the strong pipeline will help create momentum and opportunities for future growth. In retail, cost efficiency and consolidation continue to remain top priority for our clients. There is intense focus on leveraging AI to accelerate digital transformation for enhanced customer and employee experience, predictive analytics and real-time insights. While decision cycles are long, large deal pipelines remain healthy in infra, apps and process modernization, cloud and workload migration. Communication sector is witnessing continued impact from budget cuts, delayed decision-making for newer spends and slow ramp-ups. Growth challenges for the clients persist due to increasing OpEx pressures. Cost optimizations and vendor consolidations are top priority for clients who are open to innovative solutions and are asking for AI to amplify productivity. OEM clients are showing greater interest in revenue generating services, decreased time to market, increased product quality and improved customer experience. Large deal pipeline in this vertical remains very healthy. Outlook for the energy, utilities, resources and services vertical continues to be positive, though there's slowdown in decision making. Energy clients are coming to us for large-scale transformation programs, such as digital capabilities for energy transition and journey to net zero. Utilities clients are focused on in-flight transformation programs or those required for regulatory compliance. Service clients are focused on consolidation and M&A, cloud cost optimization and legacy transformation. Our investment in industry clouds and solutions in the energy transition area has helped us differentiate in these sectors, win multiple deals and build a very strong pipeline. Manufacturing clients are focusing on controlling their spends and awarding deals which are focused on differentiation. Despite the volatile environment, deal pipeline is strong. Areas like engineering, IoT, supply chain, cloud, ERP, and digital are seeing increased transaction. There's a need to increase pace of migration to cloud, increasing productivity by transforming to smart factories and transitioning to smart products. We are seeing opportunities across auto, aerospace and industrials. We have revised our revenue growth guidance for FY24 to 1%-3.5% in constant currency terms. This is due to lower than expected volumes due to ramp downs and discretionary spends, coupled with lower mega deal volumes arising from delayed signings and longer ramp-up times due to regulatory approvals and transitions. Margin guidance remains at 20%-22% for FY24. We continue to aspire for higher margins over the medium term, with a razor-sharp focus on cost optimization and efficiency improvement. As Salil Parekh mentioned, we have launched a new margin maximization program across the five pillars, comprising over 20 tracks. With that, we can open up the call for questions. Thank you very much. We will now begin the question and answer session. Participants who wish to ask a question may press star and one on their touchtone telephone. If you're using a speakerphone, please pick up your handset while asking a question. This is required to ensure optimum audio quality on the call. Should your line have any disturbance, you may be asked to return to the question queue if you don't have a clear connection. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Kawaljeet Saluja from Kotak. Please go ahead. Yeah, hi, thank you. You know, my first question is, the fact that, I know in the prepared remarks, both, Nilanjan and Salil, both of you mentioned that, the guidance cut is partly due to a delay in volumes or other delay in signings of, mega deals. As far as I remember, your guidance, you know, at the lower end, was not predicated at, you know, probably, not predicated on mega deal closures, which is 4%, and 7% was predicated on, mega deal closures and volumes flowing through. I'm just trying to understand, if you can just delay your guidance and, you know, basically just highlight what% of the cut is attributable to your perception of change in view in the external environment, and what% is really the, you know, delayed signings of mega deals here? Yeah. Kawal, as you know, there was a guidance of 4%-7%. Of course, the higher end of the guidance had a larger amount of the mega deals. The 4%, of course, was predicated a lot on the base volumes, which by default would be in Q1, Q2, and this is where we have seen discretionary spend cuts in Q1 in some clients, and of course, in Q2 as well, some of that softness continues. As you know, if you have to meet the year, Q1 and Q2 are very critical for that really to happen. Fundamentally, that's the base reason. As we exit the year, of course, at the higher end, there was the impact of mega deals, and our guidance on both ends have come down. One of the reasons the top end that has come down is also largely also due to the delayed mega deals signing and the transition times. The pipeline, as Salil said, is very healthy. We've got two under the belt, we are as confident as we exit the year. Nilanjan, just to get it right, you know, when you basically spoke in the last quarter, you did highlight that one Q would be weak, and you expect pickup in two Q. Whereas right now you're saying that, you know, one Q and two Q are strong quarters. I'm just trying to understand the disconnect in commentary. The second part, you know, to the question, Nilanjan, is that, you know, two consecutive quarters, two consecutive misses. I guess last time around as well, there was a lot of pushback saying that the environment has deteriorated, and have you built in any extra cushion into your guidance, you know, et cetera. What are your learnings, you know, in the last two quarters, and what are the steps you have taken to ensure that the forecasting process is a little bit more robust than, you know, what the guidance cut in the last two quarters indicate? Yeah. Kawal, see, as when we give the guidance, we see the outlook at that point of time. We have a semblance of what is a pipe. We assume some convertibility. There's an existing book of business, but like I just said, in Q1, from a sequential basis, we are lower than where we thought we would end up to be, right? Because like I said, Q1 and Q2 was critical for us to meet that guidance. We have seen these discretionary cuts in clients in some sectors, which we've just called out, right? That's what I would say, the base business. On the other side, there's the mega deal impact. We've got a good pipeline, and some of these deals, which were supposed to kick in earlier, are getting delayed later into the year as we speak. Okay, that's clear. Just a final comment, you know, how's the pipeline, you know, after the conversion of the $2 billion mega deal, you know, as such? Can you just comment on the pipeline? That'll be useful. Kawal, this is Salil. The pipeline, we still have a good pipeline of both large deals. We have some mega deals in the pipeline as well. We see a lot of the work that we're doing on cost, on efficiency, automation, in consolidation, those are tracking well with clients. There are some transformation programs which are funded from within, the cost efficiency. Those are also something that we're tracking through. We do see, with the two mega deals signed, a good pipeline today of large deals, and we have mega deals in the pipeline as well. Right. Just finally, you know, is the upper end of the guidance band in any way predicated on future mega deal closures, or it's based on the deals closed, you know, up to now? Here, the way we've built this guidance or our view of the 3.5 is based on what we have closed today in large and mega deals. We have a way of estimating based on what we see into the future as an aggregate, not as a one-off or not as a binary discussion, but in aggregate with what we see as the probabilities, and also the probability of when that work will transition and the revenues start. Those are what we see in the pipeline are baked into it. Thank you. Thank you. The next question is on the line of Yogesh Aggarwal from HSBC. Please go ahead. Yeah, hi. Thanks for letting me come. Salil, just couple of questions. Firstly, on banking. Your banking weakness has been there for a few quarters, and now most other companies are showing weakness as well. Whereas if you look at the clients itself, most of their financial reserves, the tech commentaries and the data is not that weak. Where is the disconnect, you think? Are they spending more with captives or smaller subcontractors? Where is this market share loss coming from? Yogesh, I think what we see in our financial services or banking, part of financial services, there are different clients of ours that have different patterns in terms of their own pressures within their business. Some of our clients have had good results, but there are some which have had more difficult economic situations. Also, with a mix from geography between Europe, Asia Pacific, and U.S. When you break it down into specific sub-industry areas, when you look at asset management, when you look at investment banking, when you look at payments or mortgages, those are the ones where we are seeing the impact. Our sense is generally our clients are not spending on those projects. It's not that they're spending somewhere else. Typically, they're choosing not to spend at this time. As the environment changes, we will see how that pattern changes. Okay. Okay, thanks. Just a quick follow-up. The revised guidance now at the lower end, I wanted to ask you have already won few mega deals, and the lower end of the guidance suggests almost negative or flattish growth for the next 3 quarters, which would also mean that for six, seven quarters now, revenues would be flat. What are the assumptions for the lower end of the guidance, I wanted to know? Here, as Nilanjan was sharing about the guidance, the approach is really focused on what we've seen in terms of volumes, discretionary projects, in quarter, in Q1, and an overlay then of the actual mega deals and large deals we have already won, and the estimate that we're looking at. Some of those deals have start dates have moved out, whereas the volume and discretionary project slowing is still in quarter. Our view is based on how that plays out between those trends. We saw the 1% in terms of the lower end of the guidance when you combine that, of course, the higher end we talked about earlier. Fair enough. Thanks. Thanks, Salil. Thank you. Thank you. The next question is from the line of Ankur Rudra from J.P. Morgan. Please go ahead. Thank you. Salil, thank you for the updated guidance. I just wanted to get a sense of, you know, obviously, the pass rate for the next three quarters is now moderated from maybe it could have been 2%-4%. With the same old guidance, it's 0%-1.5%, as discussed. I'm just curious about the discretionary cuts and the delays you referenced in your guidance change description. Has this happened more towards the latter half of the quarter? Has there been a linear change over the course of the quarter? There, Ankur, the way we've seen it is, there has been no difference in the pattern at the beginning or the end of the quarter. It's more focused on the industry that we referenced in our opening remarks between Nilanjan and me. We have seen in different places the discretionary work and some transformation work where it was either slowed or stopped based on different industries. Okay. You know, also just wanted to get a sense of maybe asking this in a slightly different way. Obviously, the guidance change is quite drastic. Is this just the change in environment of spending over the course of the last three months? Or is this also a difference in the way you measure the likelihood of success of when the deals ramp up or the win rate of future deals? I'm just curious about, you know, that, and if this guidance is more conservative in any way versus the last time you said it. There, it's a combination, as you pointed out, of the environment, in terms of the discretionary or transformational projects in quarter. Some of the mega deals and large deals, we saw delay in decision-making, in closing, and also delay or changes in the start time or ramp-up of the profile of that deal. We've actually not seen any change in the win rate, and in fact, internally, we had a good win rate in Q1, and we continue to see good traction, whether it's consolidation, cost, efficiency, on the win rate side. Appreciate that. Just one clarification, if you could. You know, this $2 billion framework agreement that you referenced as your second large deal. Could you clarify if this is fully contracted, and is this type of deal historically also been disclosed in your TCVs over the last few quarters or years? The deal, we have first made the announcement, as I'm sure you've seen. We have completed the contract signing of the deal. That's when the deal was announced. These types of deals were also included in the past within a large deal mix. Of course, in the past, there was no requirement of disclosing the specific values. Okay, understood. Last question, if I can. On margins, they were obviously flatter this time, and, you know, I mean, it seemed like you've done well, given what the growth has been. The 5-point margin maximization plan you've highlighted, is this you playing offense or defense on margins? In other words, is Infosys confident of potentially expanding margins in FY24, or is this more for margin defense? Because growth outlook doesn't look very strong, at least at the lower end of guide. Yeah. Like we said, this is a two-year program we have started. It is quite comprehensive. It's just not looking at cost, it's looking at portfolio. This is now being led personally by Jayesh, with 20 tracks, 30 leaders. Of course, our aspiration continues to be that we will aspire for higher margins than where we are today. From that perspective, it is offensive, on offense. I would say offensive, but on offense, this thing to increase our margins. That's the intent. Appreciate it. Thank you, and thanks so much. Thank you. The next question is from the line of Apurva Prasad from HDFC Securities. Please go ahead. Yep, thanks for taking my question. Salil, just wanted to prod further on the guidance. In the last quarter, you had referred to achieving top-end basis, the strength of pipeline and factors that are binary. Are those binary factors still in the pipeline or they've converted, but transition is taking longer? What I'm trying to get at is how should we really reconcile the change in revenue guide in the last three months, between delay and volume cuts, which is as large as $200 million? There, we've already announced two mega deals, which is a positive. We have large and mega deals in the pipeline. The way we've seen it is really, the two points you mentioned, which is the volume discretionary work in quarter, and the delay in the start or the realization transition of some of the large and mega deals. Those are what have translated to the change in the guidance. Any way that you could split those factors, how much of an impact would that have been? We will not be in a position to quantify that further between those two, unfortunately. Got it. Okay, just how would you characterize the business environment and your client conversations at the end of the quarter as compared to how it was at the beginning of the quarter? There, it's really the way we see it is, our pipeline for large and mega deals is in excellent shape, as we've closed the quarter. We see good traction for our mega deals and our large deals. The focus is much more when you're talking to clients on efficiency or cost or consolidation, we have a real traction with them. We see less discussions on digital transformation. Then, in general, across the client base, for those industries that I referenced in the opening remark, we see where there are discretionary programs, where the client feels that they can slow them or pause them for some time, we see that action. Those are the two sort of actions we're seeing. Very good traction, in fact, on the large and mega deals. Apurva, does this answer your question? Yes. Yes, thanks. Thank you. The next question is from the line of Kumar Rakesh from BNP Paribas. Please go ahead. Hi, good evening. Thank you for taking my question. My first question was more of a clarification. Can you just confirm the process of deciding the revenue growth guidance? Is it the same, which was last fiscal year versus this year, or have you changed some of the assumptions or the processes that you follow? Hi, Rakesh. This is Salil. We're following the same approach that we followed over the last several years, as we build sort of outlook of our guidance that we share with the market. Great. Got it. Thanks. My second question was on the margin side. This quarter, we had a slight decline on the margin sequentially. Now wage hike is yet to be given out. How confident are you on holding on to the current margin or the margin which we had last year, when the cost saving program also that you are going to start running, or there would be more of headwinds than tailwinds on the margin side? You saw my margin walk, right? We actually had a 70 basis points benefit from utilization, cost optimization. We are seeing the tailwinds of that. The big part of that we've actually put back into employee-related compensation, which is variable pay. That's a big part, promotion. It's not that we are losing that to the market, that's a conscious decision for us to, you know, plow it back towards our employees. As we look ahead, you know, we are actively considering compensation hikes as well. We announced it in our press conference earlier. The new program, which kicks in, we think in optimization, will give us the necessary tailwind to be, you know, well within the margin guidance band. Great. Thanks for that. My last question was around the volume commentary, which you gave. Last quarter in April, when we had the discussion, you had talked about that volume through the quarter, you were seeing signs of improvement. However, in this quarter, you have seen performing much below your expectation. What has... Which are the specific pockets you are seeing the weakness specifically? Is it more client-specific or the entire industry, you are seeing a much stronger weakness? It is client-specific. Like this time, in fact, we saw slightly more resilience in the U.S.-based clients. Europe turned out to be slightly weaker. It is very client-specific, actually, across, and, you know, it's, you know, sort of a leaking bucket in, you know, a number of clients. You know, there's no large, sort of a drop-off. This is largely with, as I said, the discretionary part, right? It is, you know, some programs, you know, which can be pulled back and are discretionary in nature. Those are the ones we are seeing. Thanks for that. Thank you. The next question is from the line of James Friedman from Susquehanna. Please go ahead. Hi, thank you. Salil, I think many investors are wondering. Would appreciate your thoughts. Does it seem to you that the soft demand is primarily due to macro factors, which are presumably temporary? Or is it potentially something more profound, like perhaps related to the relevance of services or mind share? Is this just macro that's gonna go away, or is it a question of services itself? This is Salil. Thanks for the question. The way we see it today, we see this demand environment, especially on discretionary that we've been discussing so far as a function of the macro environment. We can see, for example, if you look at different industries, manufacturing growing at 21%, other industries doing well, whereas financial service is weaker. Our service portfolio, we believe works well. We've already transformed the company, moved it predominantly into a digital business. We are very strong on cloud with our Cobalt offering. Now with generative AI and broadly with AI, we've launched our Topaz offering. My sense is those are resonating well with clients, and the places where we see the constraint have been more with the macro. Even some of the large and mega deals we are winning, we're winning against fairly intense competition, where we are demonstrating our capabilities, whether it's on transformation or on cost or efficiency or consolidation. Okay, thank you for that context, Salil. I'll drop back in the queue. Thank you. The next question is from the line of Abhishek Bhandari from Nomura. Please go ahead. Yeah, thank you. I have two questions. First of all, Salil, congrats to you for this $2 billion mega deal. If you could share some more details, you know, around this project, given that it is probably the largest, you know, announced anywhere globally. Is it pure services deal or, you know, there is an element of, you know, any hardware purchase along with it? Do you think this will get into revenue translation more in the second half of this year? Thanks for the question. On this specific deal, what we have shared in the public domain is as per the filing with the stock exchange. It really focuses on work that we're doing related to AI and automation-led development, modernization, and maintenance services. We don't have anything more to add to that comment. Sure. Do you think this goes into revenue translation in second half? Yeah. Again, there, we don't have anything more on the specific deal. It's more the general comments. We have talked about the large, and mega deals. We do see in general, across our large and mega deals, the revenue, coming through in terms of the transitions and revenue realization, are more towards the later part of the year. Got it. Thank you. Thank you, Salil, for that. Nilanjan, my final and second question is to you. You commented that, you know, the salary hikes are under active consideration. Do you think this year the hike cycle could differ, you know, compared to our usual cycle? You know, it could be more linked to when the growth comes back, we probably will be in a more, you know, better position to give the hikes to our employees. No, like I said, we are considering everything. Nothing to add more than that really, in terms of timing or anything like that. Okay, got it. Thank you. Now the best. Thank you. The next question is from the line of Moshe Katri from Wedbush Securities. Please go ahead. Hey, thanks. In general, it seems that Europe has been holding up really well relative to. Moshe Katri, may I interrupt you? Sorry. Please use the handset. You're not very clear. Yes. Yes. So far, Europe has really been holding up well, much better than the U.S. Can you talk a bit about what you're seeing in Europe? Maybe areas where you are seeing some strength in terms of verticals. I'm assuming the U.K. is a big part of it. As that trend continues, based on what you're seeing, i.e., is Europe still holding in there, or is it also slowing down? That's my first question. Thanks. Thanks for your question. This is Salil. We saw good traction, and we've seen that over the last several quarters in Europe, as you pointed out. We've seen that especially in the manufacturing segment. We've had good traction in multiple geographies in Europe, we've had a good traction in the Nordics. We also announced a strategic win in the Nordics, which was public a few weeks ago. We have good traction in Germany, as you referenced, a good traction in UK. We've had a good traction so far. The macro environment, we feel as Nilanjan also pointed earlier, is definitely something that is affecting overall in Europe. We are seeing within the segments we reference, for example, Financial Services and the sub-segments there, in Telco, in some parts of retail, those being impacted in Europe as well, and we'll see how that plays out into the future. Okay. My follow-up is about an article that came out this week in the local media in India, suggesting that there is an uptick in demand for lateral hires from the industry. These hires will probably start happening in the, you know, in the month of October and on. Does that make sense to you versus what you're seeing out there in terms of demand and pipeline and the ramp that's kind of, as you said, it's kind of slower than expected? For us, My sense is, again, some of the comments you might have heard earlier from Nilanjan. Our utilization has gone up, our total headcount number is reduced, and we believe we have some headroom for the utilization to go up further. That would be the context in which we are operating. Understood. Thanks for the call. Thank you. The next question is from the line of Mukul Garg from Motilal Oswal Financial Services. Please go ahead. Yeah, hi. Thanks. Salil, just wanted to, you know, kind of probe a bit further on the change in the guidance. I'm just, you know, focusing on the lower end of your previous guidance. Well, it does not look like the miss in Q1, from, you know, what you were kind of thinking about last quarter was that meaningful, for the guidance at the lower end to come down so drastically. Is it fair to assume that, you know, the incremental slowdown which you have witnessed is more front-ended, i.e., in Q2? Or was there an expectation of a, you know, meaningful pickup in the business in second half, which is now no longer there? On the guidance, again, some of the comments that Nilanjan shared earlier, we saw in Q1, the volume and discretionary projects slowing. Based on that, plus, the delay in some of the large or mega deals, starting up in terms of revenue, we felt that has given us the view of the lower end of the guidance. What we see, really is a function of the way the volume and the discretionary project evolves. The macro environment, as we look out, is changing as we see things which are from US to Europe to Asia. Keeping those factors in mind is how we built that lower end of the guidance. Sure. Similarly, you know, on similar track, you know, is there, you know, something we need to kind of pre-visualize in terms of sanctity of large deal TCV, which we disclose? Your commentary on pipeline and large deal wins continues to remain very robust, but there is a fair bit of pain which you are kind of talking about from a discretionary side, which would be coming out of the large deal number. You know, can you share the impact on overall TCV, or is that something, you know, which you would kind of start reassessing, simply because it's giving a misleading picture when you look at only the large deal win? There are some distinctions. What we are seeing in the large deals, mega deals, wins, in the pipeline and what's more recent in the past quarters, was more on cost or efficiency or consolidation. That work is continuing. What we reference on the slowdown is more on discretionary projects, which are projects or transformation projects, which are from before, which could have been paused or slowed down by the clients, and specifically in the industries, where we reference the impact. Those are the ones we are seeing, so they're not in a sense correlated with the large deals that we're looking at today. Sure. If I may just ask for clarification, you know, is there any impact in terms of your growth guidance from any client-specific issue, you know, specifically, as Nilanjan kind of highlighted in Europe, in terms of client insourcing or, you know, kind of slowing down business to you in an any vertical? There, what Nilanjan was referencing to is not that it is client-specific as in a one or two clients. It was more in terms of clients within that industry vertical, and more now shifting, in what we had in the U.S. to the European market. It is not that we have a specific one or two clients where we've seen this impact showing up from. Sure. I think that's helpful. Thanks for taking my question. I'll get in touch with you. Yeah. Thank you. The next question is from the line of Surendra Goyal from Citigroup. Please go ahead. Yeah, good evening. I know that you don't share this data point, but could you give us a directional sense of how ACV, annualized contract value, trends, would have moved or would compare YOY, given the changing nature of deals towards the large and mega cost take out deals? Thanks, for the question, Surendra. We are not in a position to share that information. Okay. On this, recently announced mega deal in the sense of, renewal versus new? The one that was announced after the quarter, before the results? Yes. Yes. Okay. Again, we are not announcing the net new in a specific deal. What I mentioned earlier was the type of work, and that's what we can say in addition to what we filed with the stock exchange. Sure. Thanks. Thanks, Salil. Thank you. The next question is from the line of Prashant Kothari from Pictet. Please go ahead. Yeah, hi. Couple of questions. One is when looking at the revenue growth guidance this year, it seems we'll be growing maybe worse than the peer group that we track, even in terms of the deciding on management compensation. How do we think about that? I mean, are there things that we need to do in order to regain the kind of competitiveness in the market so we can continue to outgrow out there? Or you think it's all down to discretionary demand being weak, and therefore there's nothing much that we can do, and we just need to wait for the cycle to come back? That's the first question. There we have a view with our portfolio that it's a portfolio of services that works well with our clients. We absolutely have the intensity in the client environment with our large and mega deal wins to be back into the growth mode that we've been in for the last several years. We also have, as you know, a high base for comps. Q1 of last year was 21% growth year on year on the previous year. Whereas the environment of the other peers were not there. All of those factors coming into play, we are very much of the view that we have what we need, and we are continuing to go into new areas like generative AI or continued investments in cloud, to build out what we want, what our clients are looking for, to continue with the growth situation. Okay, thank you. If it is kind of more about the external environment, then, what would be a good kind of a leading indicator that you would use maybe internally, to figure out that this weak discretionary demand phase is kind of coming to an end? Internally, we have several elements we look at. These are not typically data we share externally. But in terms of the overall sort of translation of that, is what we translate into the guidance then. All right. Yeah, which is presenting a bit of a weak picture as of now. All right. Okay. Thank you much. Thank you. The next question is from the line of Bryan Bergin from TD Cowen. Please go ahead. Hi, good evening. Thank you. I wanted to ask on the margin expansion program. I understand this is a two-year initiative. Can you give us a sense of materiality? Just how are you thinking about the potential cost savings or an approximate margin expansion potential that you expect to achieve from these pillars? We can't, you know, really quantify it. These are five, we think, critical tracks, pricing and a more holistic, you know, sort of value-based selling approach. That's a big one. We know from a, you know, pyramid perspective, we have a lot of scope as well. We understand with generative AI and our ongoing automation projects, which we have, that's a, you know, continuously and actually with generative AI, we think we can up the productivity from baseline even more. Some of our portfolios in our mix, how do we improve, you know, margins that to a dedicated, you know, hit team looking at these accounts? Finally, the indirect cost side, how do we keep a cap on that, looking at more efficient buying, procurement, savings, et cetera. It's a quite a holistic approach, like I said, across many tracks. These have been kicked off. Can't quantify the, you know, number at this stage, but like we said, our aspiration continues to be to improve our margins in the medium run. Okay. My follow-up, I understand you've gotten a lot of questions here on the fiscal 2024 growth outlook. Just trying to clarify everything here and maybe tie all these questions together. Is it right to say that at the low end of your 2024 growth guidance, that you're assuming a worsening of volume reductions and a worsening of decision-making pace for the balance of the year? At the upper end, that the decision-making improves? Just trying to really get to the point of, are you assuming more of the same in the improvement or further deterioration within this range? The, the way we've constructed this guidance, we see that there is a change or a difference in the environment, in the decision-making. We have seen some of the impact in some of the industries, that I, that we shared earlier. We, we will see how that volume discretionary work translates itself over time. So we've baked in some range of possibilities into that. We, we wanna see how those possibilities play out. Thank you. Thank you. The next question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah, hi. good evening. Thanks for the opportunity. Nilanjan, the employee headcount is down 3% over the last two quarters, but the absolute employee cost is up 2%. What explains that dynamic? Yeah, like I said, this time, we have put about, you know, 90 basis points, I think, of impact. You don't see the entire thing in employee cost, because even third-party costs have come down. If you see about 90 basis points, actually more than one, 120 and then seven, 90 basis points is actually in employee costs. Variable pay is a big one, which we have upped consciously in this quarter, a little bit of promotion, there are other, of course, other items, balancing items. Yeah. Just a clarification there. In the context of the deteriorating environment and attrition sort of falling, the assumption was that employee costs would be something relatively easier to manage. Obviously, because the performance, company-wide performance itself is lower, the variable also should be lower. What's driving the dynamic on higher variable pay and the compensation? We look at this holistically. I think, I mean, we are here, I mean, we don't look at just one quarter and decide these decisions. We're looking at the overall environment, and, you know, attrition, et cetera, and that's a decision we collectively take. It's just not in a quarter-to-quarter basis. We have enough headroom in our utilization, to grow volumes, and, therefore, the attrition which we see, is not entirely replaced by lateral hiring. A part of that happens through lateral hiring, and we continue to reskill and move up our fresher bench and rotate people through projects. That benefit we continue to get. Like I said, the, you know, 70 bips benefit, which we are seeing, is coming partly because of improved utilization, right? Sure. Lastly, the $2.1 billion deal that we announced, in which vertical is that? A quick clarify, that'll be helpful. no, we don't mention that, really on what vertical is. Okay. Thank you so much, and all the very best. Thank you. Thank you. The next question is from the line of Vibhor Singhal from Nuvama Equities. Please go ahead. Yeah, hi. good evening. Thanks for taking my question. Some two questions from my side. One on the, harping on the guidance part again. I mean, for long, I think, the guidance that Infosys gives is kind of seen as a benchmark for the industry and a read-across for the entire sector as well. The sharp cut that we had this time. Just wanted to understand, the putting on hold of discretionary spend and other issues that you mentioned that caused us to lower this guidance. Do you see that as a very Infosys specific thing, or do you see it more of an industry across the board that maybe other companies are not seeing it right now, they might be following suit in the next few quarters? Or is it something in the nature of our portfolio because of which you probably feel that it was a stick? I mean, in the last 3 months, because other companies that have reported, there might not have been such number difference in the guidances, but the kind of significant or sharp cut that we have seen, we haven't seen that kind of a change in commentary over the past 3 months by any other player, per se. Would you like to basically give some color on how readable is this environment that has caused us for this situation to the other companies in the sector or the industry? There, my sense is, if you look at our Q1 number, we have 1% quarter-on-quarter growth, which from what I've seen across the industries, may be one of the strongest quarter-on-quarter growth. We have a clear view of what we see as we've been discussing on large and mega deals, giving us strong growth orientation later in the year with some discretionary work, which is slowing in Q1. I don't have a sense for the other players, but that's how we see it. If I look at Q1, we have a good outcome, in terms of a solid quarter, and looking at the industry, maybe a higher growth Q-on-Q than many others. Got it. In terms of conversations with the clients, I'll just follow up on that. In terms of the conversation with clients, I think you mentioned it before in the call as well. I mean, what is the overall general conversation like when they put this discretionary part of the deals on hold? I mean, do they want to do it given the weak macro at this point of time? Is there any rethinking on the part of whether they need this kind of spend at all? Are those original decisions being questioned itself to begin with? What exactly is the nature of the conversations with the clients which are putting these spends on hold? Here, what we've seen is, again, in the industries, we referenced before, whether it's financial services or telco or high tech, where clients or the industries are going through, a difficult environment themselves in the macro. They're looking for help or support from their partners like us, where they put some projects which they perceive to be not immediately relevant for them, on a pause or slowing. Those are the discretionary works that slow down. We will see as the environment changes, what happens there. Got it. Great. Thanks for taking my questions and wish you all the best for the rest of the year. Thanks. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to the management for their closing remarks. Thank you. Over to you. Thanks, this is Salil. I just want to close out. Thank you everyone for joining us. In summary, for us, really, we've had a solid Q1, very good Q1 Q growth, solid margins, excellent large deals and mega deals, wins. This sets us up very nicely with some of the delays and the volume slowing more for the later part of the year. We've also got incredible traction in generative AI with 80 projects and the Topaz work resonating with clients. We've now put in place a stronger program on margin expansion, which is in play. Putting all of that together, we see, this is a year where we'll make that difference, translating to mega deals and large deals, and as we come, towards the later part of the year, showing the realization of all of those. Thanks again, everyone, for joining in, and look forward to catching up, at the next quarterly call. Thank you very much, members of the management. Ladies and gentlemen, on behalf of Infosys, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.