In the quarter, you added $33 million incremental revenues. How much was from Intelliswift? Also, on the 150 bps margin impact and the double-digit guidance for next year - does that include Intelliswift?
We did clarify in our Q3 commentary that Intelliswift is an annualized business of $100 million. We are not splitting the revenues between LTTS and Intelliswift. The full quarter included Intelliswift barring a few days - the conclusion of the transaction happened on January 3rd, 2025. We saw roughly about 150 bps of margin dilution on account of Intelliswift consolidation. We are working actively on the integration plan and expect to see synergies both in terms of revenue and cost play out in the next following quarters.
On next quarter - in FY25, we saw SWC seasonality leading to a weaker Q1FY25. Are you expecting in FY26 also the quantum to be similar? And on Tech margins, should we assume this to be the base?
We don't want to give QoQ guidance like some peer companies do. But indicatively at this stage, Sustainability will definitely grow QoQ. Software and platforms which includes organic plus inorganic from Intelliswift will grow QoQ. MedTech will grow QoQ. Mobility I think will grow as well as it looks right now. The seasonality of Smart World is there, but we are trying to beat it. It will not be as bad as it was last year.
On segmental margins - how should we think about Tech vertical margin baseline and FY26 evolution?
The Tech margins had the impact of Intelliswift acquisition roughly about 150 bps. Second, it also had the cyclical growth of Smart World. In terms of where I see the baseline EBITDA margins for each of the segments, I would request that we kind of wait for about a quarter as things are settling down. We called out a few headwinds - large deals deferred toward latter part of the quarter, and continuing support to strategic customers as investments. Allow us a quarter till we continue to clarify.
On wage hike - which quarter will you see the impact?
We are cautiously optimistic. As a management, we have yet not made any decision in terms of wage hike. That's something that will play out during the quarter depending on how we see the macro uncertainty kind of settle down. We just gave wage hikes in November. The appraisal process has started, but we haven't made a decision on when to deliver the hikes in CY25.
On the investments related to clients - is it fair to assume the revenues to an extent should also come back since you were requested not to bill them last quarter? Could that be a tailwind in 1Q or 2Q? And on the guidance - is 10% the worst case?
Yes, Bhavik. May not be on the same deal, but other places, yes. On guidance - I request you, you've known us for a long time. Let us say 10% and I'm saying double digit. I'm saying better than FY25, FY26 will be better and that's where it is. And I don't think it's 10%. Of course this will be better.
On the impact on revenue from the investment you did at the end of the quarter - have you quantified that?
We will not break it down, Sulabh. We've clarified that we did see an upside from the Intelliswift acquisition, we've seen a few headwinds. We will not break it down to that level. But what I will suggest is if you can have an offline conversation with Sandesh.
On Mobility growth coming back sooner than later - what data points or conversations with clients are making you believe this could be the case? And on the pause/stops in certain places getting lifted?
We have talked about some of the deals that we have already won earlier in the quarter. And then we have some more transformation deals which are running, which we hope to close sooner rather than later. That's the confidence that we have based on our relationship with our customers. Some of the programs that our customers are running, they are getting delayed - getting pushed out by about a year or so. The market as such will remain ambiguous for about another quarter or so. Probably towards the end of second quarter of the financial year, we believe that this will start settling down.
On growth - is double-digit guidance assured? And were you disappointed with Q4 organic growth given some deals got pushed?
With the backlog of deals that we have got, in addition to the strong deals win we have had in the last 2 quarters, we believe double-digit growth is assured. It's not 10%, it's definitely greater than that. A part of that will come from Intelliswift and a part will come from others. In Q4 there were few large deals - one saw a delay in ramp-ups and signing of deals were deferred to the end of the quarter. Second, in order to support select strategic customers, some of our proprietary solutions and niche work was done on an investment basis rather than on a chargeable basis.
On the large deals being won in 3Q and 4Q - how should we think about ramp-up over next couple of quarters? And on margins, how should we think about the wage hike?
As far as deal ramp-ups is concerned, the ones that we won in Q3 have all ramped up now and will provide us revenue in Q1 and beyond. Other than the one that we won on 31st March, the other deals have also started ramping up and should provide us positive revenues in Q1. Sustainability will grow faster than Q4 because that is in full flow. Mobility - we expect either flat or grow but no more degrowth. In Tech, three of the hyperscalers now are almost 20 Mn+ accounts for us in an annualized run rate basis.
On the large deals you've signed - is there any change in pricing or timelines vs deals you were signing two or three quarters ago?
We are seeing probably the same kind of deal making that we saw in the past. Just that clients are coming in and asking for better efficiencies, leveraging AI and spot solutions. A significant part of the deal wins this quarter and last quarter have been baking in our own solutions and providing productivity benefits to the customer. The unusual requests that came for investments in Q4 came in the last week of the quarter from two, three of our strategic customers - we have not seen this in the past. We had seen it during COVID. We don't think this is an ongoing thing.
On geography - is any particular geography worse impacted by macro headwinds, particularly North America vs Europe?
There is a lot of consolidation deals still running in Europe that we've got. The US has got more new tech digital transformation kind of deals running. We are starting to get a number of inquiries for Plant transfer, for line transfer, for operational technology support, for creating servitization of people's product lines as well as support on the China plus One strategy where we are providing them sourcing support.
On onsite mix - has it increased due to Intelliswift acquisition or other strategic shift?
Yes, majorly it's on account of Intelliswift, partly on account of some of the large deals that tend to start where we do work onsite and then we see it moving more towards offshore. But majorly it's on account of Intelliswift consolidation.
On the guidance - assuming no major macro headwind from here, is it fair to assume organically FY26 will be similar to or better than FY25? And on the investments/proprietary solutions provided to clients - are these reimbursements at later stage or already-made investments not to be reimbursed?
I do believe organically FY26 will be a better year than FY25 if the other shoe doesn't fall tomorrow. We're adding 2,500 freshers. The first lot of 500 will join in June. We are preparing for a growth year. On investments - in one case, it was investments we had made and implemented the product, with money owed to us; they came back and said rather than paying you, take this as goodwill. In a second case, there was a niche solution to be billed on 31st March - we were requested to not invoice and take it as part of our investment. We have agreed to both. We don't see this ongoing, but this is a one-off.
On Mobility vertical - within Mobility, is auto doing well, but you are seeing pain in Aero and Off-Highway?
You are aware of how our customers are doing there, whether they are in the automotive or in Trucks and Off-Highway or in Aero. The pain is there. What we do believe is that this is going to last for about a quarter or so. But given the solutions and some of the deep relationships and the deals we have won - part of which are consolidation deals, some are carve-out deals - we do believe that the growth will come back sooner rather than later in this sector. We do remain very bullish about this segment.
Is it fair to assume on margins that when revenue comes back, margin also comes back since lack of revenue led to margin weakness?
Yes, Sulabh, that's how it is. And aside of this, we are also running a very targeted margin improvement plan now in the organization. We didn't see these levels of headwinds - they all came in beginning of February. So we are running a lot of efforts to sustain margins going forward, sustain and improve as well.
On order inflow - half won against competition. Is it fair to assume those consolidation deals come at lower margin than company average?
No. In fact, when I said won against competition - 70% of the deals were won in a competitive manner based on solutions we had, 30% were single source to us. I would like to confirm to you that all the deals we have won in Q4, as well as the deals we have won in Q3 are at standard segmental margins in which they have been won.