Ladies and gentlemen, good day and welcome to Infosys Limited Q3 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 touch-tone phone. Please note that this conference is being recorded. And I'll hand the conference over to Mr. Sandeep Mahindroo. Thank you, and over to you, Mr. Mahindroo. Hello everyone, and welcome to Infosys earnings call for Q3 FY 2025. Let me start the call by wishing everyone a very happy new year. 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 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 complete statement and explanation of these risks is available in our filings with the SEC, which can be found on www.sec.gov. I'd now like to pass on the call to Salil. Thanks, Sandeep. Good morning and good evening to all of you. Wish you a happy new year. Thank you all for joining us on this call. Our revenue grew 1.7% quarter-on- quarter and 6.1% year -on-y ear in constant currency terms in Q3. All verticals and most geographies grew year on year. We saw double-digit growth in Europe and India and in our manufacturing business. Large deals were at $2.5 billion, operating margin at 21.3%. Free cash flow for the quarter was at an all-time high of $1.26 billion. Headcount grew by over 5,000 sequentially to now over 323,000 employees worldwide. Financial services in the U.S. continues to grow strongly in this quarter and over the past few quarters. We have seen a revival in European financial services during Q3. We are seeing an improvement in retail and consumer product industry in the U.S. with discretionary pressures easing. Automotive sector in Europe continues to remain slow. Demand trends remain stable in other industries, with clients continuing to prioritize cost takeout over discretionary initiatives. Clients are turning to us as the partner of choice when it comes to enterprise AI to transform their business for growth and to manage operations more efficiently. With Infosys Topaz, our generative AI-powered services and solutions, we are deepening our enterprise AI capabilities. We have built four small language models for banking, for IT operations, for cyber, and for enterprises broadly. These small language models have 2.5 billion parameters. These models are built using some of our proprietary data sets. We are developing over 100 new generative AI agents for deployment within our clients. We are working closely with a generative AI partner ecosystem to develop joint solutions for our clients, several of them on the platforms of the partners. Here are some examples of the work we are doing for our clients in the generative AI area. We developed a generative AI-powered research agent that generated comprehensive solutions within seconds for requests made for the product support teams of a large technology company. We have created three audit agents to intelligently automate multiple tasks for a professional services company. Based overall on our strong performance in this quarter and our view for the rest of this financial year, we are revising our revenue growth guidance to growth of 4.5%-5% in constant currency. Our operating margin guidance remains unchanged at 20%-22%. With that, let me request Jayesh to share his views. Thank you, Salil. Good morning, good evening, everyone, and thank you for joining the call today as well. We wish you all a very happy new year. We had another strong quarter of all-around growth across verticals. This was backed by relentless execution, resulting in improvements in multiple operating parameters, leading to expansion in margin and cash conversion. Here are some of the key highlights. We had a strong all-around growth across verticals of 6.1% year-on- year in constant currency terms. Among geographies, North America returned to positive growth trajectory after four quarters, growing at 4.8%. Europe grew at 12.2% YoY in constant currency terms, twice the company level. Financial services saw a third consecutive quarter of volume growth, reflecting continued positivity we are seeing in the sector. Our top 50 clients increased by seven. Large deal TCV for the quarter was at $2.5 billion, 63% of this being net new, which is an increase of 57% in net new deal TCV. Our large deal pipeline has become stronger in Q3. Coming to margins, Q3 margins are at 21.3%, 20 basis points higher sequentially after absorbing impact of furloughs and higher third-party costs. Margins were up 80 basis points year on year. We saw double-digit YoY increase in EPS of 11.4% to INR 16.43. Our razor-sharp focus on cash flow resulted in very strong free cash flows of $1.2 billion for the quarter and $3.2 billion for nine months. This is an increase of 90% on YoY basis and 57% on nine-month basis. DSO was at 74 days. However, DSO, including unbilled net of unearned, was down by six days at 86. Our net unbilled revenues declined by $323 million sequentially to the lowest level in the last 12 quarters. Net headcount addition continues for the second consecutive quarter. We added 5,591 employees this quarter. Let me now talk about some of this in greater detail. We had a strong revenue growth of 1.7% sequentially and 6.1% on YoY basis in constant currency terms in a seasonally weak quarter. For the nine months, revenue grew by 3.9%, both in constant currency and reported terms, with double-digit growth in manufacturing. Operating margins expanded to 21.3%, which is an increase of 20 basis points sequentially and 80 basis points year on year. The major components of sequential margin work for the quarter are tailwinds of 40 basis points from currency movements, 30 basis points from Project Maximus, 20 basis points from lower costs relating to provisions for post-sales customer support and expected credit loss provisions, offset by higher third-party costs. Headwinds of 70 basis points from furloughs and lower working days, offset by higher leave utilization and others. Utilization, excluding trainees, was strong at 86% despite the low volume growth environment. We are very pleased with the continued success of Project Maximus, which has resulted in benefits across various tracks. One such area is realization, which has increased by 3.6% over nine months, resulting from strong performance emanating from value-based selling track. This has helped expand YTD margins by 30 basis points despite additional headwinds from FY 2024 comp increase, higher variable payout, impact due to amortization of intangibles from recent acquisition, and large deal damper. Headcounts at the end of quarter stood at 323,000, growing sequentially by approximately 5,600. This is the second consecutive quarter of headcount addition. Attrition remains low at 13.7%. Coming to cash flows, our nine-month free cash flows have surpassed full-year free cash flows for the last financial year. For the quarter, our free cash flows were at $1.26 billion, up 51% over last quarter and up 90% over the same period last year. FCF, as a percentage of net profit for nine months, was 136%. Excluding income tax refunds, our free cash flow for the quarter was at $996 million, up 27% over last quarter and up 50% over Q3 2024. Our free cash flow, excluding tax refund, as a percentage of net profit for the quarter is at 123%, and for the nine months, it is 109%, which is the highest conversion in over two decades. Yield on cash balance was 6.91% in Q3. ETR was at 29.5% for both Q3 and nine months. We closed 17 large deals with a TCV of $2.5 billion. 63% of this was net new. Vertical-wise, we signed five deals in financial services, four in communication, three in manufacturing, two each in retail and EURS, and one in high tech. Region-wise, we signed 11 large deals in America and six in Europe. This also includes a BOT deal with a client to set up a GCC in India. For nine months, large deal wins stood at 72 deals with a TCV of $9 billion, and 55% of this is net new. Coming to verticals, financial services in the U.S. continues to see discretionary spend increase in capital markets, mortgages, cards, and payments, which led to another quarter of volume growth. We have also seen a revival in Europe, leading to Q3, backed by some large deals. Our expansion beyond the U.S., specifically into Nordics, Middle East, and Southeast Asia, is also contributing positively to our growth. Clients have started to view IT investments more favorably post-election-related uncertainty and interest rate cuts in recent months. While the focus remains on cost optimization, spending towards new growth areas like AI, cloud adoption, cybersecurity, data, and analytics is observed. Manufacturing continues to see weakness in the automotive in Europe. However, there is a continued momentum in areas such as engineering, IoT, supply chain, cloud ERP, and digital transformation. The benefits of vendor consolidation are being more apparent, contributing to the growth of existing accounts and the establishment of new relationships. The pipeline is healthy with a mix of large and small deals and a focus on cost takeout and portfolio rationalization. We are seeing some signs of recovery in discretionary spend in the retail and CPG verticals in the U.S. There is a pickup in deal activity backed by improved consumer sentiment and strong holiday season sales. Companies are looking at investing in brand and technology initiatives. S/4HANA migration deadline is driving budget allocation to make enterprise workload compliant. We are leveraging Infosys Topaz to showcase enhanced business value in predictive analytics and real-time insights and strategic decision-making. Communication sector continues to face volatile macro environment, leading to growth challenges and rising OpEx pressures. Discretionary spending continues to be soft, and current year growth is driven mainly by recent large deal wins focused on efficiency and consolidation. In EURS sector, macro headwinds and supply-demand imbalances continue to influence spending patterns. Growth in demand for electricity to cater to data centers is expected to bring in more investment and energy. Resources clients are more watchful about the changing geopolitical dynamics impacting the supply chain. Discretionary spend remains muted. Our investment in industry clouds and energy transition solutions have helped us win multiple deals. High tech continues to remain soft. Some clients are reducing the run costs and pausing discretionary investment. We are seeing opportunities in cost takeout deals, including legacy product management and managed services-based business operations. Programs are driven by cloud computing and new tech like AI and ML. Driven by our performance and outlook for the rest of the year, we are revising our FY 2025 revenue guidance to 4.5%-5% in constant currency terms. Our operating margin guidance remains at 20%-22%. With that, maybe we can open the floor 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 touch-tone 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. Participants, you may press star and one to ask a question. The first question is from the line of Ankur Rudra from JP Morgan. Please go ahead. Thank you. And nice print. Can you comment a bit about if there were any one-time items in your revenues or margins this time? I do notice that your third-party costs moved up quite a bit, perhaps ahead of revenue growth, and also volume growth was quite soft. So if you can talk a bit about how you think about volume growth into fiscal 2026. I know you mentioned you think that will be better than last year. And if there's any impact of AI impacting the volume of work, thanks. Thanks, Ankur. So you're right. Our third-party costs were higher this quarter. There is a bit of seasonality in every Q3. But yeah, it's even considering that it was higher than that. And that has impacted both costs as well as revenue. That has helped both costs and revenue as well. In terms of volume for FY 2026, it's a little bit early, Ankur. As you know, we do get the visibility with clients in terms of budgets in February and March, and then it aligns with our cycle, our annual cycle. So we will be able to give a clearer picture in April as we announce the guidance for the full year. There were no other one-offs either on revenue or costs in this quarter. Appreciate the comments. If you could talk a bit about the guide. Now, the guide increase is positive, but if you look at the implied number for Q4, it implies a negative number. Is this primarily due to seasonality or also partly from the third-party sales-led business, which might shrink, which you baked into the guide this time? Ankur, there are two parts, as you rightly said. One is, of course, the third-party seasonality, which is baked in Q4 guidance because Q3 was significantly higher, and Q4 also has lower working days and calendar days, so that's a headwind that we face in Q4, so both of that is baked in the guidance. Appreciate it. Just last question. You mentioned a lot about small language models, agentic AI. Can you talk a bit about how, on a structural basis, this might impact the volumes of your work, the need for productivity passed back, and if this will be net additive or dilutive to the amount of work Infosys can do for its clients? Hi, Ankur. This is Salil. On the agents, what we are seeing is good traction with clients where we've already deployed the couple of examples I mentioned, but there are several live or production examples, not just proof of concept. What we are seeing is the agents are helping clients to achieve benefit by the time reduction, cost reduction, or greater impact in their customer base and growth. And they're being done in a broad-based way within the client. So the way we are seeing it today, the areas which can be addressed by agents, we are building about 100 new agents, which expands the opportunity that we have to do this sort of work. So at this stage, it looks to us like this will give us, over time, more growth. On small language models, the usage of that small language model is to create some activity, sometimes software development, sometimes customer service, sometimes the knowledge objects within the client and make a positive impact in that. Those all have some elements for them to get additional market share and for them to be more efficient. The more they're deployed, again, for us, we see the possibility of driving growth through that as they get deployed. One of the examples on a small language model, we're working with a client where they want to build their own small language model based on one of the four that we build, the enterprise one. That then translates into their industry and for them to drive it more within the company. For us, it's like having the model as a service. So for us, it's an expansion of work in the more of those that clients are looking at. So at this stage, we're seeing a broader set of opportunities while overall scale is small, but it's looking like there'll be more opportunities in this area. Thank you. And would you classify this nature of work, Salil, under cost-oriented, efficiency-oriented work, or is this more discretionary-oriented work? Today, AI is something where many clients are doing different programs. It's not like the traditional tech, which had that sort of a view and where when industries were getting back, the discretionary was increasing and otherwise it was more cost. Today, we see the spend is broad-based. The end outcome sometimes could be the cost for their own growth, but it's not that easily put into one of those buckets today, at least. As it becomes more mainstream, we'll be able to see how they use it. Today, there's a broader usage of AI within companies that is going on. Okay. Appreciate it. Thank you, investor. Thank you. Next question is from the line of Yogesh Aggarwal from HSBC Securities. Please go ahead. Hi. Just have one question on the third-party items, the pass-through revenues. Jayesh, you talked about seasonality, which is for the fourth quarter. But in general, if you step back, will this line item continue to grow with the top line, or is there a limit? One can expect around 9%-10% will settle down, or this is a new reality that for every new deal, new work, the pass-through revenue will grow in line with the overall revenues? So Yogesh, at this point in time, we don't expect this to change significantly, but it's also a factor of the large deals or the mega deals that come in at times, right? So it's dependent on some of the large deals come in where you take over the tech, the process, people, technology from the client. And as a result, you do incur those costs on your P&L because you are providing an end-to-end solution to the client. So it's going to be a factor of that. But based on current visibility, we are not seeing any significant increase from here in the next few quarters. Got it. Thanks. Thank you. Thank you. Next question is from Bryan Bergin from TD Cowen. Please go ahead. Hi. Thank you for taking the question. I wanted to start on pricing. So I think you mentioned a 3.6% nine-month realization tail and very solid. I'm curious how you think that progresses from here as you pursue this value-based pricing strategy, and what is a reasonable level of potential pricing impact you'd expect going forward? And then just more broadly, can you comment on the competitor pricing situations in the market? Bryan, as we had talked earlier, this is one of the pillars under our margin improvement program, and there were multiple tracks beneath that, and those tracks are yielding results. It's difficult to predict from here whether this will be this kind of growth year on year will be sustained or not. But our endeavor is to keep improving and keep getting the best from where we are. So very difficult to give a guidance there. Having said that, coming to your second question, the pricing environment per se across at least what we are seeing in the industry is stable at this point in time. Okay, and then on utilization remains modestly above your normalized range, around 86% ex-trainees. Can you comment, is this a new normal? Will this move lower as hiring continues? Where do you see that progressing? Yeah. So we have generally said 83%, 85% of utilization is the range that we are more comfortable with. 86% is a little bit above our comfort level, but we don't expect it to change significantly either way. So yeah, 83%, 85% is where we would like to be. Okay. Thank you. Thank you. Next question is from the line of Rishi Jhunjhunwala from India Infoline. Please go ahead. Yeah. Thanks for the opportunity. I'm sorry I had dropped for a minute, so in case I'm repeating the question. Just wanted to understand the growth in top five clients, right? So it has declined pretty sharply in this quarter, down more than 6% QoQ in dollar terms. And even on a year-on-year basis, there hasn't been much growth. So just trying to understand what exactly is happening there. Rishi, the sequential change in the top five clients is pretty much furloughs, largely because you do see furloughs impacting many of the large clients. And of course, these are also reported numbers, so there could be a bit of currency impact as well, depending on which geography the top five clients are also. The year-on-year will be client-specific. There would be some deals which would have ramped up, ramped down, as we have seen. So there could be multiple reasons. I don't think there is anything sectoral here in a way to decipher from here in my mind. Okay. And just secondly, clearly, last year, we had a pretty big year in terms of overall deal wins, almost $17.6 billion. This year, currently, we are annualizing at around $12 billion. Just wanted to understand, in terms of proportion of revenues that comes via pass-through, has that changed in the amount of deals that we have won in totality this year versus last year? Not really, Rishi. If you look at last year, we had some of the mega deals in the deal signing, which we had called out for as well. I think we had around six mega deals in the last year, eight mega deals in the last year. So that has helped the $17 billion. But as you know, those deals are volatile. Some quarters, you do have mega deals, and some others, there's always these spikes in the mega deals. The large deals, we have been outside of the mega deals, the large deals, we have been consistently in the range of $2.5 billion-$3 billion. If you look at this quarter, $2.5 billion has 63% net new, which means that the net new sequentially has grown by 50% quarter-on- quarter. That having any significant impact this year on third-party? We don't expect any significant impact from the deals that we signed this year on the third-party. Okay. Thank you so much. Thank you. Next question is from the line of Jonathan Lee from Guggenheim Partners. Please go ahead. Great. Happy New Year. Thanks for taking our questions. Last quarter, you called out improvement in your smaller deal pipeline, but it doesn't sound like that continued into this quarter. What do you think is driving that difference, particularly given some of the improvement you called out in discretionary demand? So Jonathan, as we said, our overall deal pipeline has grown because this quarter, our large deals pipeline has also become stronger. And the pipeline outside of the large deals have remained stable. So that has reflected in overall deal pipeline has grown. There's also a reflection of everything that Salil talked about in terms of the positivity in certain sectors that we are seeing, especially the financial services in the U.S. and Europe, the positivity in retail in the U.S., and the cost takeout opportunities in some of the other segments that continue. Appreciate that color. On the European BFSI front, can you help us unpack some of the strength you called out there? What is it that you're seeing in your conversations there, and how durable is that strength? Yeah. So it's across the deals that we have signed. It's more about the, I mean, we are not seeing a sectoral change in a way, but we are seeing a large number of deals that we have signed benefiting us in terms of the positivity in the coming quarters. It's across cloud deals and consolidation of some of the vendors that we have seen that should help us in coming quarters. Appreciate it. Thanks for that level of detail. Thank you. Next question is from the line of Surendra Goyal from Citigroup. Please go ahead. Yeah. Hi. Good evening. One of the industry players called out AI-driven productivity passed back to a large client of theirs. Have you seen any such instances in any of your large clients? So on the AI-driven productivity point, in general, what we see is whenever there is a productivity benefit, there's always sharing with clients. So in the AI-driven or the other outside of AI-driven, we are not seeing a difference in the way it's being treated. Many of these, like the examples I gave on agents or some of the examples we've done in the past where we've looked at the foundation models doing software development or customer service, typically, some benefits will go with the client, and typically, we'll get to keep some benefits. Okay. Maybe I'll ask the question more specifically. The top five client performance, has that been impacted by any such productivity pass-through? No, Surendra. It's more of, as I said earlier, it's more of furloughs this quarter. Some part of that is currency because some of the clients are in the different geographies or non-U.S. geographies. And if you look at year-on-year, I don't think there's any sectoral behavior we are seeing there. Sure. Thanks a lot. Thank you. Next question is from the line of Vibhor Singhal from Nuvama Institutional Equities. Please go ahead. Yeah. Thanks. Thanks for taking my question. Hi, I have a couple of questions. So the first question is on the expected growth rate for Q4, which, as per the guidance, comes in the negative territory. Now, you alluded to the point that it's probably based on the seasonality. So should we assume that this is the reality for business now, that the overall growth rate that we have at this point of time, in general, Q4 is going to be sharply, let's say, lower than what Q3 does, despite the fact that Q3 itself would be lower because of the furloughs and the early seasonality that we see? If you can answer that, and then I have a follow-up question. Yeah. So if you look at Q3 was benefited by some of the third-party revenue, right? So to that extent, there is an additional seasonality versus what we generally see in Q3 and Q4 as a seasonality. Historically, if you look at our first half, it has always been stronger than the second half, and within second half, depending on how the calendar days and working days play out, you would see one quarter better than the other quarter. This year, we have lower working and calendar days both in Q3 and Q4, and that is how Q3 and Q4 are impacted. Plus, Q3 has larger furloughs. Q4 will have some furloughs, so you will see overall some furlough flashback offset by a working day and calendar day impact and a reversal of the benefit that we got in terms of the third-party revenue. Got it. And the third-party revenue will also have the seasonality of maybe peaking out in Q3 and then maybe tempering down in the following quarters. Is that also fair to believe? Yeah. That is how it generally is, right? In Q3, you do see many of these deals having larger volumes. Got it. Got it. Fair point. Just one last question is on the retail vertical. I'm sorry if I missed out in the opening parts. I mean, what is the outlook in that vertical overall that we are seeing? I mean, we've alluded to discretionary spend picking up earlier. I think a couple of your competitors also have had basically seen the vertical bottoming out. How is this vertical playing out for us and our outlook for this upcoming quarters? So what we have said is we are seeing positivity in retail and CPG in the U.S. That is reflecting from the fact that the sales in the holiday seasons is better. The consumer sentiment is getting positive. So all of that is starting to reflect in the deal pipelines, etc., and the client's behavior in terms of decision-making, etc. So we are seeing that positivity in the next one or two quarters. It should start reflecting in terms of volume. The deal pipeline in the vertical also remains strong? Yes. Deal pipeline overall has remained strong. If you look at, again, in this quarter also, we did sign a couple of retail deals as well. Got it. Got it. Yeah. Thank you so much for taking my question, and wish you all the best. Thank you. Thank you, Vibhor. Next question is from the line of Ashwin Mehta from Ambit Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity. Just wanted to check in terms of impact of the wage hikes. Will it be full impact next quarter, or will it be staggered? And what is the margin impact that you see of wage hikes? Ashwin, as we have said earlier, our wage rollout is going to happen in two phases. First phase starting 1st January, and the second phase will start from 1st April. The India wage increases would be, on average, 6%-8%. Of course, the higher performers would get much higher, etc., and the overseas would be low single digit. We haven't really called out the margin impact on account of that. Most of the employees will get comp increase in Q4. Okay. Thanks. And just one follow-up to an earlier question. So you indicated that the top five client decline was largely furlough-led. So ideally, this should recover in the next quarter itself, right? Yeah. I mean, likely, yes, Ashwin. We don't give the projections by the brackets of clients, but furloughs should reverse for sure. Okay. So the decline is much higher than because you had almost a 1% drag because of these top five clients. And in terms of our guidance, there's a decent enough decline built in. So essentially, the decline is much more than more and more is the understanding. So Ashwin, it's going to be, as I said earlier, it's going to be furloughs. It'll be currency. Plus, it can also be factors like third-party. If one of those clients had third-party last quarter versus this quarter, there could be those things. I'm not seeing any sectoral behavior in those brackets, which is where the client is behaving differently. Okay. Thank you. Thanks for the clarification. Thank you. Thank you, Ashwin. Next question is from the line of Jamie Friedman from Susquehanna International Group. Please go ahead. Hi. Good evening. Nice print. So how are you characterizing linearity, the linearity narrative now? Because I see you're taking up the headcount, which seems quite constructive. I was wondering the automation impact contemplation relative to linearity. So on linearity, we see currently there's benefits coming, as you stated, from automation. There's also benefits that Jayesh was sharing earlier from pricing. But broadly speaking, I mean, at the scale we are operating at today, we still see benefits with the employee headcount increase. So for us, that's a good signal on a net basis because it's showing that we are expanding the work that we're doing overall. In the medium-long term, there are different sort of views that could develop. But right now, we are positive with the employee growth, and we do see the pluses and the minuses with some of those elements you referenced internally. Thank you. And a separate question with regard to the net new number, which was quite robust. Does the net new reflect either the similar vertical operating group or service lines as the current base of business, or is there something that is net-net new going on in the new bookings? So we are also positive on the net new. It demonstrates an expansion of what we're doing typically with existing or new clients. We don't sort of detail out the specific service line, but it's sort of at a macro level sufficient to say that we see very good traction on areas like cloud. We see good traction in a small way on what we were discussing earlier on generative AI. We are seeing good traction on areas like SAP S/4HANA. We are seeing good traction, as Jayesh shared earlier, on broadly cost takeout. So these are not, let's say, all net-net new. Generative AI is, but it's a mix of these things without sort of getting into the specifics on the 63%. Perfect. Thank you. I'll jump back in the queue. Thank you. Next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead. Yeah. Thanks for the opportunity. Surendra, just the first question. When we entered FY 2025, we had a lot of support of the mega deep large deals, which have ramped up in the first nine months of FY 2025. With those largely into the ramp-up stage and might fall into steady state, do you believe FY 2026 we may have to worry, or do you believe FY 2026, as some of the industry peers are calling out, better than FY 2025? So do you believe for the industry FY 2026 could be better than FY 2025? So there, as I think you know, we don't have a comment externally on the next financial year. What we are very clear is with this better view on financial services, so the first was U.S., now financial services Europe. The better view on retail and consumer products U.S. We are starting to see some positivity on the discretionary. We have, with a net new of 60%, looking good with where that brings us into the next cycle, and overall, going in with an increased guidance, we feel confidence going into Q4. We also see the deal pipeline for large deals looking more robust than it was at this time last quarter, so overall, we see our execution of what we are driving. The traction that the clients are giving us is incredible. That's what we have to say because we sort of stop in terms of specific guidance at March 31. But generally speaking, what we're seeing underlying seems to be positive. Okay. Just other questions. Any color in terms of deal pipeline below 50 million, which has grown 10% Q1, Q2, and Q3? Any update on the same? Second, in terms of margin, Jayesh, do you believe the likely reversal in the third party could be enough to offset the wage hike impact in the third quarter? And also in terms of the recruitment, which we have done in this quarter, can you throw color? Is it more pressure-driven, or is it more lateral-driven? Sorry, Sandeep. What was the first question? Small deal. Yeah. Small deal pipeline. The small deal pipeline remains stable as compared to last quarter. As Salil said, our large deal pipeline has grown, so our overall pipeline therefore has become stronger. So that's point number one. Point number two, we will have headwinds in terms of compensation. We will have tailwinds coming from if the third-party cost is coming down and some bit of currency depending on how the currency plays out. But at this point in time where we are, there could be some benefits from there. So that's broadly the puts and takes. We don't really quantify each of them as we get into this quarter, so I wouldn't get there. The last question on recruitment? I think recruitment is a combination of both freshers and laterals. Again, we have not broken up this number, but for the year, we have hired or we will hire 15,000-plus freshers in line with our original commentary. For the next year, we are expecting 20,000+. Okay. Thanks and all the best. Thank you. Next question is from the line of Sumeet Jain from CLSA India. Please go ahead. Yeah. Hi. Thanks for the opportunity. If I recall correctly, last quarter, you mentioned that sub-$20 million deals had a very strong pipeline. So can you just comment? Did you actually see the positive impact of that in this quarter? And how does that deal pipeline look like at this stage? So Sumeet, what we said was the sub-$50 million deals, which have grown 20%. We haven't really called it out how much of that is converted, how much of that is not. And in any case, whatever we convert in this quarter, we'll start showing up results in Q4 onwards. So more likely than not. So that is how it runs out. The idea behind giving that data point last quarter was we saw a significant change there, which we thought it was important to share it with investors. But we are not breaking that up further as to how much of that got converted or not. At this point in time, we still continue to see that as stable. The large deal pipeline has become stronger. All right. Got it. That's helpful. And secondly, in terms of - sorry, actually, I forgot my second question. Maybe I will come back to have it in the queue. Thank you. Next question is from the line of Keith Bachman from BMO Capital. Please go ahead. Hi. Thank you very much. My question is on cost to serve your clients. And what I mean by that is, how is AI changing your cost to serve today? And I'm not talking about AI deals. I'm talking about the broader portfolio. And how do you envision that changing, say, a year from now? So there, in terms of AI and our cost to serve, what we are seeing, some of these elements we've discussed in the past at the level of what our activity is, we see applying, for example, some of the small language models and large language models within the company for areas like software development. And we've seen some benefits accrue from that. Now, the place where this becomes the most relevant is when we have clients where there's a large common sort of foundation of approach, a common foundation of data infrastructure. Or, for example, where we have our own business of Finacle, where we've started to apply these. We are now rolling this out where we see common elements across our own internal business. Those are benefits that will support us, and it'll be one of the levers that will help us over time on our margin activity and as part of our program. We don't have an external quantification, but that's something that is one of the elements of the approach we are driving through internally. As time goes on, we get you need some large common element, common data set to make impacts on that area, on area of customer service, and other areas where GenAI can be applied within Infosys. Okay. Well, let me ask my follow-up related to that. You called out SAP as being a strong area for you, and I think it's candidly strong for a number of different vendors or suppliers. Presumably, GenAI will help with deployments over time because there's a notion of software development as the SAP ECC customers migrate to the cloud. And so as that develops into more robust capabilities for Infosys, how does that change your pricing to the customers, say, a year from now for deployment of SAP work? Because if you're getting a benefit, presumably, the customers will want to share in that benefit. So how do you think it is? Is it a source of deflation for you, or how do you think that unfolds, particularly from the software development side? So I think if I understood what you are asking, this is on SAP software development when we are doing it for our clients. In that instance of today, the demand, as we were sharing earlier, on S/4HANA or even on RISE, which is the cloud migration piece, is strong in the SAP area. Now, that work is more implementation or migration, so it's not typically software development. Having said that, some elements of the agents that we discussed before, especially in the finance process, which is where we are seeing the biggest impact today in invoicing and other finance activities, we will see some impact and benefit. However, stepping back, all of that, let's say, benefit will eventually, at least from past experience, is almost always shared with the client in some way. So, I don't see that approach of sharing will change, and which to us means we will get some benefit and the client will get some benefit. Okay. I will cede the floor. Thank you. Thank you. Next follow-up question is from the line of Sumeet Jain from CLSA. Please go ahead. Yeah. Hi. Thanks for the opportunity again. My second question is actually around the retail vertical growth sustainability. I think last entire year, we mentioned that because of high interest rates and inflationary environment in the U.S., this vertical had a pretty subdued growth. So we saw pretty strong sequential growth here. So how do you see the sustainability of growth in FY 2025? And post the U.S. election outcome, do you see any client sentiments changing, particularly in this vertical? Sumeet, the Q3 growth in retail was also helped by some of the third-party deals that we talked about earlier. But as I said, and Surendra said as well, the retail in the U.S. and CPG in the U.S., we are seeing a revival in terms of the growth on the back of the strong holiday season sales, as well as the consumer sentiment changing. So at this point in time, we are seeing revival and interest from client in terms of spending, which should ideally reflect into growth in the next few quarters. Right. And secondly, in terms of the GenAI rollouts, are you seeing any specific verticals where the impact is slightly higher in terms of volume gains or increase in pricing? So, generative AI today is in discussion across almost every industry, most clients. So some of the examples that we were discussing earlier is like in a technology company, we are doing a lot of work in the telco area. And of course, in financial services, where we discussed overall segment and the retail point we discussed. But generative AI discussions are more broad-based. Almost not every, but let's say a lot of clients are quite actively looking at doing something. Most clients have some internal and then with us, some external activity going on there. Got it. That's helpful. Solid. And lastly, just want to understand the 3.6% YoY increase in pricing you mentioned in the first nine months. What has been the primary factor behind that very strong increase in pricing? Sumeet, this is Jayesh here. This is the program that we've been running on margin expansion, and there is one dedicated pillar, which is value-based selling. And there are multiple tracks beneath that. I think many of those tracks have started yielding results, whether it is change request, whether it is differential pricing, etc. And all of that has yielded results in multiple ways. Of course, even the lean automation is also reflected in pricing eventually, right? Because if they're able to deliver the same output with lesser people, it will reflect in pricing. So all of that would show up in pricing. All right. That's helpful. So that's all I had. Thanks for the opportunity again and all the best. Thank you. Thank you, Sumeet. Next question is from the line of Abhinav Ganesan from SBI Pension Funds. Please go ahead. Hello. Thank you for the opportunity and congratulations on a great set of numbers. I just wanted some more clarity on these third-party software packages, which have risen to around 9.5% of revenue for the current quarter. I think in your comments, you alluded to retail vertical taking up some of that. If you can give some more color, are there any more verticals you would like to call out and also geographies? Abhinav, we don't really split this by geographies and verticals. That was one specific question that Sumeet asked, and I was responding to that question. But we can't really break this by geography or verticals. Okay. Just sorry to follow up on this, but I just wanted to understand if you can give a broader color. Now, if you've looked at it in the recent last two years, if you look at it, our cost takeout deals have gone up compared to the discretionary spend. Now, discretionary spends are returning. So this number has trended up from around 6% to 9.5%. So once discretionary comes back, do you feel that this will kind of stabilize and maybe then trend down later? If you can comment on that. So Abhinav, as I said earlier in the call as well, this is going to be dependent on many of the large deals that we sign and what are the contours of those large deals. If the large deals is a deal where we are taking over people, process, technology, and providing an end-to-end solution to the client, it will come with some of these third-party costs like hardware, software, etc. And that will automatically show up on our books as costs. But then we are providing an integrated solution to our clients, which is much more secure in the long term. So that is how it is. It is going to depend on, in the future, what part of the deals or the larger deals come through as a lock, stock, barrel kind of a program where we are taking over everything from the client. Got it. So appreciate the same. One last question from my side. If I look at your utilization, it's around 86%. So what would be your comfort zone going forward, at least for the next quarter and the next year? And how would we get there if you can give some color? Can you hear us? Yeah, I can. Just wanted to get clarity on utilization is touching 86%. So can you just give some more color on how this will go? How this will pan out going forward? Hello? Hello? Am I audible? Yes, sir. Just wanted to understand some color on utilization if you can give that. That's it. Thanks. Please stay connected. Thank you for your patience. We are getting the line for the management. Reconnecting. Yeah. Transfer the mainline. Hello? I hope I'm audible. Yes, sir, you're audible. Yeah. Just wanted one last question. Now, your utilization has reached around 86%. So just wanted to understand what would be your comfort zone for the coming quarter and the coming year, and how would we get there if you can give some color? Thanks. Yeah. So as I said earlier as well, our utilization comfort level is 83%-85%. This quarter, we are tad above that. But yeah, what would be more comfortable in a growth environment would be 83%-85%. Appreciate the color. That's all from my side. Thank you and all the best. Thank you very much. Ladies and gentlemen, we'll take that as a last question. I'll now hand the conference over to the management for closing comments. Thank you. This is Salil. So first, thank you everyone for joining in. Just wanted to share a couple of observations. Very strong growth in this quarter, especially financial services U.S., financial services Europe. Now starts to see traction in discretionary retail consumer products U.S. All of those good signs for us. Extremely strong cash generation, good large deals with very good net new. Continued deep sort of capability building and traction on generative AI with our clients. And with that, an increase in our growth guidance. Third in three quarters. So we continue to see, as the environment starts to be more supportive in FS retail, the execution that we are driving within Infosys resonating with our clients. And we continue to see that traction with the increase in the guidance for the third consecutive quarter. Thank you, everyone, and catch up with you at the next quarterly call. Thank you very much. Thank you. Thank you, members of the management. Ladies and gentlemen, on behalf of Infosys Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.