Ladies and gentlemen, good day, and welcome to Infosys Limited Q2 FY 2025 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 this 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 Mr. Mahindroo. Hello, everyone, and thanks for joining Infosys earnings call for Q2 FY 2025. Joining us on this call is CEO and MD, Mr. Salil Parekh, CFO, Mr. Jayesh Sanghrajka, and other members of the leadership team. We'll start the call with some remarks on the performance of the company, subsequent to which the call will be opened up for questions. Please note that anything we say which refers to our outlook for the future is a forward-looking statement that must be read in conjunction with the risk 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 transfer the call to Salil. Thanks, Sandeep. Good evening, and good morning to everyone on the call. We had a strong performance in Q2 with robust and broad-based growth, stable operating margins, strong cash generation, strong large deals, and increased employee headcount. Our revenue grew 3.1% quarter-on-quarter and 3.3% year-on-year in constant currency terms. Financial Services grew at 2%, Manufacturing double-digit, Energy, Utilities and Services at 5.8%, all quarter-on-quarter. We saw growth in all geographies, quarter-on-quarter basis. Our large deals were $2.4 billion. Our overall pipeline remains strong. We saw a double-digit quarter-on-quarter increase in our pipeline of deals below $50 million. Our operating margin for Q2 was at 21.1%. Free cash flow for the quarter, $839 million. Employee attrition stable at 12.9%. We will launch our employee compensation increase in two phases, effective January 1, 2025 and April 1, 2025. The financial services segment in the U.S. continues to see discretionary spend increase in capital markets, mortgages, cards, and payments. We've seen slowness in the automotive sector in Europe. Apart from these verticals, demand trends remain stable, with clients continuing to prioritize cost takeout over discretionary initiatives. Our Q2 performance reflects our sustained strength and differentiation in the industry. We are deepening our work in generative AI. We are working with clients to deploy enterprise generative AI platforms, which become the launchpad for client usage of different use cases in generative AI. We are building a small language model leveraging industry and Infosys datasets. This will be used to build generative AI applications across different industries. We've launched multi-agent capabilities to support clients in deploying agent solutions using generative AI. Our generative AI approach is helping clients drive growth and productivity impact across their organization. We are partnering with clients to build a strong data foundation, which is critical for any of these generative AI programs. One example, we are working with a logistics major using Topaz to power their operational efficiency improvements. Concurrently, we are supporting their digital transformation journey to help them deliver exceptional services for their customers. With a strong performance in Q2 and our current outlook, we have revised our revenue growth guidance for the financial year. The new guidance is 3.75%- 4.5% growth in constant currency. Our operating margin guidance for the financial year remains the same at 20%- 22%. With that, let me hand it over to Jayesh. Thank you, Salil. Good morning, good evening, everyone, and thank you for joining the call. We had a strong Q2 with broad-based growth and resilient margins amidst an uncertain macro environment. Let me talk about some of the key highlights. Revenues grew sequentially at 3.1% in constant currency terms, ahead of our expectations. All geos and verticals, barring retail, grew sequentially. Europe had a strong growth and is now approximately 30% of our revenue. Inorganic contribution was 0.8% QOQ, which contributed to growth in Europe manufacturing. We had another quarter of volume growth. Financial services in U.S. continues to see discretionary spend uptick in capital markets, mortgages, and cards and payments. Both EURS and manufacturing verticals reported double-digit year-on-year growth. Overall, deal pipeline remains strong. Pipeline for deals less than $50 million increased double digits sequentially. Operating margin during the quarter was stable at 21.1%, driven by better operating metrics despite higher variable pay and acquisition impact. Utilization continued to improve to 85.9%, up 60 basis points sequentially. We saw headcount additions after six quarters and added 2,500 employees sequentially. We had second consecutive quarter of over 100% of free cash flow conversion to net profit. Free cash flow for H1 stood at $1.9 billion, 41% higher over H1 last year. Let me delve upon the details now. Revenue for Q2 was $4.9 billion, up 3.1% sequentially, and 3.3% on a year-on-year basis in constant currency terms. This included benefit from acquisition of 8.8%. Operating margin was stable at 21.1. The major components of sequential margin, margin walk are: tailwinds of 80 basis points benefit from Project Maximus, 10 basis points from the currency movement, offset by 30 basis point impact from acquisition, mainly on account of amortization of intangible assets, 60 basis points from higher variable pay and other costs. Project Maximus remains a key focus area, and successes of that is visible in improved operating metrics like utilization, realization, subcontracting costs, etc., for the quarter. H1 revenue growth was 2.9% in constant currency terms. Operating margins were at 21.1%, 10 basis points up year-on-year basis. Headcount at the end of the year stood at three lakh seventeen thousand, returning to a positive sequential growth after six quarters of decline, with net additions of approximately 2,500 employees. Utilization excluding trainings increased by 60 basis points to 85.9%. LTM attrition for Q2 was up by 20 basis points at 12.9%. We are on track to onboard 15 to 20 thousand freshers in FY 2025. Free cash flow conversion was approximately 108% for Q1. H1 2025 free cash flow is 41% higher than H1 2024. DSO for the quarter was 73 days versus 72 sequentially. Consolidated cash and cash equivalents stood at $4.6 billion after paying out $1.4 billion towards dividends. The board announced an interim dividend of INR 21 per share, an increase of 16.7% as compared to last year. Yield on cash balance was flat at 7% in Q2. ETR was at 29.6% for Q2 and 29.5% for H1. We continue to expect ETR for FY 2025 to be in the range of 29%-30%. EPS grew by 4.7% in INR and 3.4% in dollar terms on YoY basis. We closed 21 large deals with TCV of $2.4 billion. 41% of this was net new. Vertical wise, we signed 7 deals in financial services, 3 each in communication, manufacturing and others, 2 in retail and 1 each in EURS and high tech and life sciences. Region wise, we signed 12 large deals in Americas, 5 in Europe, 3 in India, and 1 in ROW. H1 large deal wins stood at 55 deals with TCV of $6.5 billion, and 51% of that is net new. Coming to verticals. Financial services saw continued growth momentum in Q2, with traction and cost optimization through large outsourcing and transformation opportunities. We saw discretionary spend uptake in capital markets, mortgages and cards and payments. Deal wins during the quarter were strong, coupled with expanding pipeline of small deals, gives us visibility for future growth. We are doing a variety of GenAI projects and are seeing them getting embedded in large programs. Retail sector continues to be impacted by economic and political uncertainties. Cost takeout, efficiency and consolidation are key priorities for clients. Consumer spend in the upcoming holiday season will be a key indicator for future spend decisions. We are progressing well on our journey to leverage AI to deliver business value with safeguards around privacy, ethics, controls, et cetera, across areas such as enhanced customer and employee experiences, digital marketing, et cetera. Communication sector outlook is challenging, with clients primarily focused on cost reduction and making their investment profitable. Discretionary spend for OEMs are expected to remain under pressure. Cost optimization and vendor consolidation are on the top priorities, with clients open to innovate solutions and asking for AI to amplify productivity. Political conflicts and higher interest rate continues to influence spending patterns, causing clients to focus on cost optimization on initiatives. We saw strong growth in verticals, especially in energy sector. Especially, there is significant traction in cloud programs, with many companies adopting the cloud and AI strategy. Our competencies in energy transition space, human experience and industry clouds and proactive client pitches have helped us build strong pipeline. Growth in manufacturing was strong, partially contributed by in-tech acquisition. Europe automotive sector has seen recent challenges, while discretionary spend remains under pressure. We have seen increased benefits of vendor consolidation. We see opportunities around supply chain optimization, cloud ERP, smart factory and connected devices across various sub verticals. We are in discussion with multiple clients for setting up AI COEs to drive AI adoption at scale. Most high-tech clients remain cautious due to geopolitical tensions. Discretionary spend and new project starts are slow due to cash conversion focus. We are advancing multiple AI programs from POC to implementation, focusing on customer support and sales effectiveness. Driven by our H1 performance and outlook for the rest of the year, we are revising our FY 2025 revenue guidance to 3.75%-4.5% in constant currency terms. Our operating margin guidance remains at 20%-22%. With that, we will open the call for questions. Thank you very much. We will now begin with 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 remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A request to all the participants, kindly use handsets while asking a question. The first question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead. ... Hey, hi, thanks for taking my question. First question is, you know, the reasons for change in guidance for revenue growth. Is it largely because 2Q came in better than your expectations? Or is it because the outlook for 2H has improved versus your prior expectations because of better pipeline of the smaller deals? Hi, Gaurav. This is Jayesh here. I think there are multiple factors that led to increase around guidance. Of course, the H1 performance or the Q2 performance, as you said, and more importantly, the broad-based Q2 performance was one factor. We saw continued momentum in volumes as well as the momentum in financial services. Our increase in the smaller deals, which is less than $50 million deals, as we said earlier, which has had a strong double-digit growth. I think all of these factors contributed to increase in the guidance. Got it. Second question on the GenAI adoption. Have you seen the GenAI actually triggering a large transformation project, and leading to, you know, multi-million-dollar deal or multi-year deals? Just trying to understand that, is this gonna lead to a wave of larger IT spend and increase the overall addressable market for us? Hi, Gaurav, this is Salil. On generative AI, what we are seeing is first, we build the capability set. Three examples that I shared of how we're doing it with platforms, with agents and a small language model. It's also very much focused on productivity and growth as clients are looking at it. So any of our large deals, the large deals today are not that much focused on transformation, more focused on cost and efficiency. So more of the GenAI focus is productivity. Any of the large deals that we're looking at, there's a generative AI component to it. Now, is it driving the large deal? Not in itself, but it's very much a part of that large deal. All right. And last question for Jayesh. What would be the tailwinds, from margin point of view in the second half, which could help us to offset the impact of the wage hike? Thank you. So, Gaurav, you know, just to put together all the headwinds and tailwinds, the headwinds will come from compensation increase in, in Q4 that we talked about. The Q3 and Q4 will have, regular seasonality in terms of furloughs, in terms of lower working day and calendar, et cetera. And tailwinds would be all the things that we are doing in the Project Maximus, whether, you know, pricing, whether we are talking about role ratios, you know, optimization. So all of those would be part of the same bucket of Project Maximus. Gaurav, do you have any follow-up question? No, thank you. Thank you so much. Thank you very much. Next question is from the line of Bryan Bergin from TD Cowen. Please go ahead. Hi, good. Thank you. I wanted to ask, just as you think about how you built the forecast forward in the discretionary view, aside from the improvement you've cited in U.S., the FSI, have you basically held everything else muted in your discretionary view as you go through the December and the March quarters? So, hi, Brian, this is Jayesh here. You know, as I said earlier, I think there are various factors that has led to a margin expansion. Sorry, guidance change. You know, starting from the Q2, Q2 performance, the increase in volumes that we saw across multiple sectors, including financial services. Our pipeline, which is strong, large deal pipeline, as well as these smaller deals, which are less than $50 million deals, which have grown double digits. So I think all of these have been baked in. Of course, there will be seasonality in H2, as we all know about in terms of furloughs, in terms of lower working days, et cetera. So all of that, at this point in time, is baked in in our guidance. Okay, thank you. And then just, just to follow up, just to make sure I understand the furloughs, can you just... How did you think about composing the furlough activity that you're embedding in the year-end? Any, any different than what you saw from last year or historical levels? No. So we, at this point in time, have baked in the regular furloughs that we have seen over the past few years. Thank you. Thank you very much. Next question is from the line of Jonathan Lee from Guggenheim Securities. Please go ahead. Great, thanks for taking our questions. Can you share further detail around what you're hearing in pricing conversations, both around new deals and any potential rescoping of deal terms, particularly given continued focus on cost optimization for clients? Hi, Jonathan, this is Jayesh here. The pricing overall, the environment has remained stable, you know, however, within the pricing environment, we've been able to make a lot of progress in terms of, you know, getting benefits on the track that we are running under Project Maximus, which is value-based selling. Many of those tracks have started kicking in benefits, which is visible in our numbers. You know, if you look at our volume growth using a proxy of the headcount, you will see there'll be a delta between the revenue and the volume growth, which is contributed by the pricing significantly. Thanks for that color. How should we think about large deal TCV momentum going forward? Are we seeing any changes to client preferences around the signing of large deals, perhaps maybe towards smaller deals, given some of what you called out around smaller deal strength? Hi, this is Salil. The large deals, the way we are seeing it, is the pipeline remains quite good for us today. There's a much more focus on the cost, efficiency, automation, and consolidation type of work. These are lumpy, so in some quarters we see a little bit more, some a little bit less, but we don't see a change in that outlook for large deals. The point on the smaller deals that Jayesh shared was a little bit additive. We are seeing more activity there as well, which is different from what we had seen before. Thanks for the detail. Thank you. Next question is from the line of Vibhor Singhal from Nuvama Institutional Equities. Please go ahead. Yeah, hi. Thanks for taking my question. So Salil, just wanted to pick your brains mainly on how the BFSI vertical is looking at this point of time. Post the interest rate cuts, has there been a change in conversation in any, let's say, the change in the approach of the clients towards discretionary spend that they might be picking up in coming quarters? How do you see that vertical play out? And then I have a follow-up. Thanks. So the financial services, we saw last quarter a good, good improvement in discretionary spend, and we continue to see that in Q2. The discretionary spend is good. We also saw the results of some of the large U.S. banks look quite strong. We see still the focus is much more on the discretionary and then some cost efficiency program. We are still not seeing large transformation type of program, but given our scale and the needs that the banks have, and some of our clients where we are seeing good, good traction, the overall feeling when we look at financial services, whether it's capital markets, mortgages, cards and payments, we see good traction on the discretionary side. Got it. Okay. My second question was on the TCV side. The TCV over this quarter appear on the software side. Would you attribute that to anything specific? Is the you know the client conversations at this point of time are the clients pushing the deals out because of the pending U.S. elections? How would you read that and how do you see the deal flow in the coming two quarters of the rest of the year? So there, we have not seen a change in the behavior, from the Q1 to the Q2 in terms of the deal timelines and so on, on large deals. These are, at least in our experience from the past, over multiple quarters, they're sometimes lumpy. We see some more, some quarters, some less, because they are large deals. That's where we are looking. So we don't see that as... At least we don't see any change, in the data about it, including in the pipeline, which looks good as well. But, we would have liked a better deal flow, I'm assuming, for the quarter. Do you see, maybe Q3 or Q4 deal flow momentum picking up, or it will again depend on how the macro factors play out? It'll be both. So the deal flow is decent, but sometimes because the size of these deals is quite large, sometimes they bunch up in a quarter, sometimes they spread out a bit. Right. So we look at it a little bit more like, over a half or over a full year when we look backwards, and that way we get a... Because most of them, you know, are driving revenue for the next several years, so it's not really like they convert into a quarterly movement. So we look at it more in that sort of time horizon. Got it. Okay. Thank you so much for answering my question. Just one question, if I could squeeze in for Jayesh. Jayesh, what is the thinking behind the pushing out the wage hike to Q3 and, in fact, Q4 and Q1 of next financial year? I mean, if I understand correctly, to some part of the organization, we would actually be skipping FY 2025 completely in terms of wage hike. So, is this got to do with overall demand environment or the kind of hike that we had given last year, a breakup? Just wanted to pick your brain on that. So, yeah, when we look at the comp hike, we look at various factors, including, you know, what's the demand environment, what's the market practice, what's, you know, when did we do the last compensation, et cetera. We have taken all of that into account. Our last comp increase was in November last year. So this is pretty much almost on an anniversary, you know, if you look at it. So that's point number one. Point number two, if you look at within this quarter, we have increased our variable pay as well. So, Okay. ... that's, that's another factor to consider as well. Yeah. Got it. Got it. Great. Thank you so much for answering my questions, and wish you all the best. ... Thank you. Thank you. Next question is from the line of Kumar Rakesh from BNP Paribas. Please go ahead. Hi, good evening, and thank you for taking my question. My first question was to understand how is the traction on your GenAI work? So you have the Topaz platform, which you have launched. You earlier had for cloud, a similar platform, Cobalt, to build an accelerator to help customers adopt a new technology. So relative to how it was at that time when Cobalt initially was launched and how it was first year of traction in terms of how many customer engagements were happening, how many customers signed up for that. Relative to that, how do you see Topaz panning out? Hi, this is Salil. So first, on Cobalt, the way, as of course you know, it was launched and rolled out, we had very strong partnerships with the three big public cloud players and have today, but when it was launched as well. We had a very strong private cloud offering, which we also have expanded, and we had a set of offerings on SaaS providers, the range of them. So that was an ecosystem which for enterprises was already in motion, and we were already playing on that, and Cobalt brought all of it together. In generative AI, for the enterprise, it's a start in terms of how it will be adopted. There are, of course, as you know, several use cases, some of them with some good traction with clients, but the method of adoption... So what we have done here, in Topaz, some of the examples that I shared, you know, we've created a generative AI platform which can be rolled out across a large organization, and then the individuals in the organization start to build out their own GenAI applications on that. We're building a small language model. We have a multi-agent framework, where the agents are doing, or a set of agents are doing full solutions to certain business processes or certain functions. So these are different ways that generative AI is being rolled out. It's difficult to compare in that sense, the two. We see much deeper capability set that we've rolled out in generative AI today than what we see anywhere else. Our clients are giving us that same view. We're also seeing generative AI a lot in productivity, and especially in the deal flow we see today in cost takeout. And there, almost every large deal or significant deal even has some generative AI component related to productivity. So it's, while not the whole deal is generative AI, a part of the deal becomes generative AI. So it's a different way it's creating an impact from what we saw in the cloud space. Any insight on the customer adoption? How many customers have signed up for that? How many transactions are happening or how many accelerators you have run on that? We have not publicly shared that for the generative AI. What we have shared are this approach we are taking, plus there are projects today are not a POC or proof of concept. They're actual projects, while they're small in revenue, are delivering impact in that space. Got it. Thanks for that, Salil. My second question was on, during the press conference, you did talk about the small language model for industry-specific use cases and the data that you are working on. My understanding is that at least the bigger models that we look around are either for consumer space or for enterprise, are generally for more of generic use cases, not for industry-specific use cases. So this, this could be a wide space from, from the product perspective. How do you want to position this in the end market? Would it still be just an accelerator built on top of what the other tools are there, or you would want to eventually look at this as, as a separate product as, as well? So here, first, if you step back, our views on enterprise AI, generative AI, large language models will also play a part. But in addition, we are working on a small language model, so it's not one or the other. The reason for the small language model, we believe we have some very good data sets within Infosys, and we are taking some, let's call it, clean data sets from outside industry and so on. These then help train the small language model. It then becomes, excuse me. We are then building it for different industries, and it then becomes deployable in an industry for a specific client, where they can build or we can help them build on this small language model, other business application. So the idea is, it's a new one. We feel we have some level of leadership on that, and we have launched this to see where it ends up. Ah, okay. So this will also work as an accelerator in deployment of AI applications. Is that, is that fair? It will also be an accelerator. It will also be a foundation on which other business generative AI applications can be built by the client or by us for the client. Got it. Great. Thanks a lot, Salil, for answering the questions. Thank you. Next question is from the line of Rishi Jhunjhunwala from IIFL Institutional Equities. Please go ahead. Yeah, thanks for the opportunity. Just one question. So your growth in this quarter, as well as last quarter, has been fairly broad-based across verticals. There has been, you know, the commentary that you've given also suggests that discretionary is seeing some sort of pickup in some verticals. But the guidance that you've provided for the second half effectively means that there is a considerable slowdown in the overall growth momentum. Now, I understand there is some bit of seasonality that comes through, but given the nature of broad-based growth that you've delivered for two consecutive quarters at the midpoint of the guidance, not having growth seems to be a little bit counterintuitive versus what you have commented on the demand environment. So just wanted to understand how you're thinking about it. Hi, Rishi, this is Jayesh here. So if you look at, you know, what we have consistently said in the past is that H1 is going to be stronger than H2. H2 will have seasonality, which is furloughs, lower working and calendar day in Q3 and lower working in calendar day in Q4. So all of that is baked in, in the guidance. Our guidance philosophy hasn't changed. We run multiple models running up to the guidance, which define the bottom midpoint and the top end of the guidance. We say it as we see it, right? So at this point in time, this is what we are seeing in terms of guidance. Got it. And just very quickly, given where your utilization levels are right now, is it fair to assume that going forward, the, you know, the hiring trend will largely reflect, you know, how you end up growing on revenues as well, since a lot of the moderation on utilization is probably behind us? That's right, Rishi. Again, you know, we've always maintained that 84%-85% is our comfort level utilization. We are already above that. So we don't think at this point in time there is any significant headroom left on that. So, you know, most of the volume growth would come from the net hiring going forward. Okay. Thank you, sir. Thank you. Next question is from the line of Jamie Friedman from Susquehanna International Group. Please go ahead. Hi, congratulations on the continued improvement. You know, but a number of the questions you're getting are about what your assumptions are about the seasonality of the year. I know you said in your previous strategies that the year is typically super seasonal in the first half. In terms of what you're contemplating for the second half, if you could share maybe what your assumptions are on, say, the cost takeout narrative versus the discretionary narrative. Is that rate of change changing? And maybe some comments on the verticals, 'cause I see, you know, it's great to have the two consecutive quarters in banking, but the retail was a little bit more volatile than expected. So any comments on the typical super seasonality and why this year looks a little heavier? Thank you. Hi, this is Salil. The way we've seen it, so there are two parts to it from what you mentioned. One, in building the outlook, we have taken, we've taken a view of what we see today. So financial services discretionary, we saw positive. We didn't see -- we have not seen, as of now, discretionary in the other industries. We saw the continued weakness on retail, and then we saw a little bit new weakness on that automotive in Europe. So all that, we took it together, then we created. So we've not assumed, for example, that some new discretionary will be positive or negative in this Q3, Q4. And the other part of seasonality, what Jayesh had shared earlier, one is the furloughs in our Q3, then is the calendar days situation, both in Q3 and we have an additional little bit in Q4. So that is also adding to the way we have built this outlook for the full financial year. Perfect. Thanks for the context, Salil. I appreciate it. I'll drop back in the queue. Thank you. Next question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah, hi. Thank you for the opportunity. So you mentioned that the deals pipeline for smaller deals, which is below 50 million, has sort of improved in double digits. How is it being in terms of closures for the current quarter when the pipeline has improved? How are the closures doing in the current quarter? Have you seen that improve as well? That is the first question. The second question is around the cost of software packages that seems to have increased on a sequential basis. How much of that would have been third party versus internal? Is there a significant pass-through revenue this quarter? What's the question around that? Some, any color around that will be helpful. Yeah. So, Nitin, what was the first question? ... as a closure rate. As a closure rate. Yeah. So if you look at our large deal closures, I don't think in small deals or large deal closures, we have not really seen a significant change in the decision-making process, per se. As Salil meant, Salil said earlier, both our large deals pipeline still remains strong and our smaller deal pipelines have increased double digits over the last quarter. But we haven't really seen a change in the decision-making behavior. They. By nature, these deals remain lumpy, right? So you will see quarters where you'll do more and you will see quarters where you'll do lesser. Coming to your second question on- In terms of closures, there's no increase in closures in the current quarter. When the pipeline is improved, the closures on less than 50 million have not really improved in the current quarter. Is that the fair way to understand? I'm saying the closure in terms of the time taken, the decision hasn't changed. So the decision-making process hasn't changed, per se. There is no further delay or, you know, delayed closure, is what I meant, Nitin. Yeah. What I was asking was, in terms of the absolute closures in the current quarter, have they improved sequentially or year-on-year? Is what I was trying to understand. In terms of the smaller deals. Yeah, so look, what we are talking about is Q3 pipeline, which has increased, so we'll have to see, you know, how the conversion of that increases. But, you know, if the pipeline increases and the win rates remain same, the closure will definitely increase. Right now, we haven't really given color on that, Nitin. What we are talking about is a pipeline we see a significant increase at this point in time. Got it. Yeah. Coming to the second question on third party, Nitin. See, third party remains integral part of many of our large deals and especially the mega deals. You know, when you take over a large project from a client, where you're taking over the people, technology, the whole solution, you will have third-party costs that you'll incur, you know, which could be hardware, software, licenses, et cetera, which will become cost to you and will become part of the revenue for the client, right? And this is both of that, the, you know, third party, we take it from the third-party vendors and whatever cost that we incur as well. So, it's all of that. We don't really break up, you know, that cost further. So that's helpful. Thank you so much, and all the best. Thank you. Thank you. Next question is from the line of Abhishek Kumar, from JM Financial. Please go ahead. Yeah, good evening. Thanks for taking my question. I wanted to double-click on the nature of the- I'm sorry to interrupt you. The audio is not coming clear. Can I request you to speak through the handset? Yeah, hi. I hope this is better. Yes, sir. Thank you. Yeah. So, I just wanted to double-click on the nature of smaller deals. You'd mentioned in the prepared remarks that, discretionary spend is restricted to certain, sub-segments of, financial services. So, in that context, are these smaller deals, mostly in, those, sub-sectors, or these, deals are also non-discretionary, essentially, you know, smaller POs that the, client is releasing, against a, you know, large lump sum contract? That's my first question. Yeah, so Abhishek, these are deals across various verticals and various types of deals. We don't really give further comment on that. Considering the fact that it was a significant moment in the overall deal pipeline, we did call it out, but we are not really breaking it up into, you know, how much of that is discretionary, et cetera, et cetera. All right. So, okay. Second question is on wage hike. Could you quantify the impact that we should bake in from wage hikes in Q4 and in Q1 of next year? So again, Abhishek, we have not really broken that out. What we have said is we will do that in phased manner, as we have done in the earlier years as well. Part of the employees will get it effective first January, and the balance will get it effective first April. Okay, fair enough. Thank you, and all the best. Thank you. Next question is from the line of Keith from BMO Capital. Please go ahead. Hi, thank you very much. I wanted to ask two questions, if I could. The first is, for the annual guidance, what is the embedded expectations for the inorganic contributions, for the year? So, Keith, this is Jayesh here. In the last quarter, when we changed our guidance, we had baked in the entire impact of the acquisitions in that. So just to clarify, this guidance change does not have any incremental change from the acquisition. This quarter, we got a benefit of 80 basis points from acquisition, which is pretty much two and a half months of you know, the consolidation effect of the acquisition. I mean, it would be in the similar range for Q3 and Q4. Okay. Perfect. Perfect. Okay. Then my second question is, it is interesting what you said about discretionary spend coming back in the smaller deals contributing to TCV growth. I just wanted to get your perspective on why you think there was a change in this category? And the reason I ask is, as you said, you know, these deals, all deals can be lumpy. And so I'm trying to understand, what do you think the durability is of the pipeline increasing in the small category? Do you think it's sustainable at this point, or durable as we look out over the next number of quarters? And that's it for me. Thank you. Hi, Keith, this is Salil. First, I think just to make sure I understood the question, there is a discretionary view, and there's a small deals or deals smaller than fifty million view, and they're, let's say, somewhat distinct. There is an overlap, but they're two separate type of activities we've referenced in our comments. On the deals smaller than fifty million, as Jayesh shared, we saw a good increase and thought sort of it's relevant in that point to share, because that gives a different type of a look into the market from what we see today. We don't know if it's durable. Now we'll get a sense over the next few quarters, you know, how it looks or the closing timeline of the deal and, like, does it stay or does it disappear? But just now it was more to show us, like, it was one of the changes which we felt would be something of interest to share like that. Okay. But no, that is the category that I was interested in, you know, the smaller deals. But no comments on whether you think it's durable or not, you know, whether- Right. It stays in place. Okay. Okay. Yeah. But was there any commonality in the type of deals in there? I know you said it was across industry verticals, so I heard that, but any commonality in the type of deals within that smaller category? Nothing that we have, you know, sort of things that we would share more color on. There is some sort of looks we've had in terms of, you know, like the areas and so on, where this, where which skills or which technologies, but we're not sharing that at this stage. Okay. All right, that's it for me. Many thanks. Thank you. Next question is from the line of Prashant Kothari from Pictet Asset Management. Please go ahead. Yeah, hi. Thanks for the opportunity. My question is around like, on the new deal wins. This was a bit of a soft quarter, but that is okay. I'm more kind of concerned about the input on that, which is when I look at the sales and support employees, they've kind of gone down by 9% Y/Y. Can you just explain what is happening? Is it more on sales or on support side, and why there has been such a large reduction? Because I think that you still need to keep engagement with your customers high, so that as and when the discretionary demand picks up, then you can actually start winning projects also. So how do you kind of think about that, versus obviously the short-term kind of margin management, which might have been trying to do through the reduction on the employee side? So Prashant, this is Jayesh here. I think, you know, it's just a factor of some attrition, et cetera. We have a large pipeline of employees who are going to be joining us on the sales as well. So, I don't think there is anything to do with, you know, margin program here. We will continue investing into sales and, you know, as required in the business. So this is more of a temporary blip, is it? Like, the number of sales people will actually increase in the coming quarters. Yeah, and, you know, our sales cost has remained in terms of the dollar value of the cost. It remained in the range of 4.5% over the many, many years. I think this is just a small blip. Okay. All right. Thank you much. Thank you. Next question is from the line of Manik Taneja from Axis Capital. Please go ahead. Thank you. Manik. The question with regards to the segmental margin performance, if you could help us understand the factors that have driven the sharp decline in margins in verticals like energy, utilities, as well as other segments, and the improvement that is seen on the manufacturing side? Hi, this is Jayesh here. You know, there will be multiple factors that will play out across segments, you know, in terms of utilization, in terms of on-site mix, in terms of the kind of business mix, et cetera, you know, the deals that will ramp up intra-quarter. So there could be, there will be multiple factors that will play out. We don't see a significant change if you look at on a, on a trend basis for a few quarters, but on a, on a short-term quarter basis, you will see some of these factors playing out in terms of margins. Sure. And the last one was with regards to wage hikes, where you suggested that they will be effective across two periods starting January one. Would be great to essentially get some sense on the quantum of wage hikes, the likely impact in Q4, and how is that split up across the workforce between January and April? Yeah, so we haven't really spelled out the quantum of the wage hike, Prashant, at this point in time. We, all we have said is it's going to be in two phases. You know, obviously, the junior employees will get it in January, and the rest will get it in April. The majority of the employees should get it in January. Sure. Thank you, and all the best for the future. Thank you. Next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead. Yeah, thanks. Thanks for the opportunity, and congrats on a good execution. Most of my questions been answered. Just wanted to understand how to read this double-digit increase in a smaller deal below $50 million. Is it first broad-based across verticals, and can it, if it continues as a trend, be a precursor of a better demand in the calendar year 2025? Why I'm asking this is, one of the reasons for Infosys' better performance in FY 2022 and FY 2023, being lot many conversion of deals which were below $50 million in terms of faster conversion to revenue. So, Sandeep, the purpose of sharing this, as I said earlier, is, you know, we do share what we see, and that is what, you know, this was one of the, one of the interesting, one of the important things we thought is important for for the investors to understand, that we are seeing a change in in the smaller deal pipelines, which directly, indirectly, in some way, you know, represents the discretionary spend, et cetera. So that's point number one. The point number two, of course, if we, if the win rate remains the same and we are able to convert that, that should, that would reflect, you know, in terms of revenue in the near term. That's... At this point in time, it's just one data point, very difficult to say whether it is going to become a trend, become sustainable, et cetera, et cetera. So I think we should, at this point in time, read it as one data point. Okay. Okay. And is it broad-based across verticals and markets? Yes, it is. Okay, thanks and all the best. Thank you. Next question is from the line of Girish Pai from BOB Capital Markets. Please go ahead. Yeah, thanks for the opportunity. My first question is regarding mega deals. Across the industry, even when I look at the peers, we've not seen any mega deals being signed. So are there, you know, similar number of mega deals in the pipeline compared to 2023? Or, or have the mega deal number kind of come down? That's my first question. So, on mega deals, we don't share specific data on what is in the pipeline and not. We only talk about the overall large deal approach. Okay. My second and third question. Second question, TCV to revenue conversion, has that changed versus what it was in the previous quarter or six months back? That's question number two. Question number three is, you talked about value-based pricing being one of the key levers in this Project Maximus. Can you just give us some examples as to how this is being practiced right now? Yeah. So, Girish, coming to your first question on conversion, we haven't really seen any significant change in terms of signing or in terms of conversion at this point in time. We continue to gain market share, you know, consistently whenever we looked at it, on a quarter-on-quarter basis. Coming to Project Maximus and the value-based selling, I think there are multiple tracks within that, you know, right from the new age pricing, the tracks on, you know, getting the change request wherever we are eligible for, you know, getting the right rates, et cetera. There are multiple of those tracks within that. We haven't really shared data beyond this for obvious reasons. But, you know, as you could see, we have. I mean, the contract has contributed significantly in terms of the realization and price realization. Okay, thank you very much. Thank you very much. Ladies and gentlemen, we'll take that as the last question. I'll now hand the conference over to the management for closing comments. Hi. Thank you, everyone. First, I want to share in summary, we had a strong quarter on revenue growth, margins, cash collections, large deals, so we feel good about that. That resulted in an increase in our revenue growth guidance for the full year, which also gives us good confidence as we look into the future. Clearly, financial services showing continued strength in discretionary spend, and segments remaining about the same with the small comment, with a comment on automotive in Europe becoming a bit slower. We have deep, deep capabilities in generative AI, and these are things where we are building platforms, agent solutions, small language models, that we believe will be of huge impact with our clients. And we continue to see a strong, strong focus on execution across our business, and that remains key for us, as we go ahead. So we remain optimistic as to how the year will play out. Thank you everyone for joining in, and look forward to catching up in the next quarterly discussion. Thank you very much, members of the management. Ladies and gentlemen, on behalf of Infosys Limited, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you.