Mphasis exited FY26 with record $2.1Bn TCV (+68%), pipeline 2.6x since launch, FY27 guided at high-single to low-double-digit growth.

While you are guiding for a growth recovery in Logistics, are there any, weak spots in BFS or Insurance or TMT at this stage, where we are concerned that some of these macro uncertainties will push these weak spots into a slippage kind of a situation?

As we stand today, the answer is no, we don't see any of those weak spots. And I think our approach to dealing with any headwinds has been just sell our way out of that by actually creating deals using the propositions and differentiation and using that momentum to work around these issues. But as we stand, nothing is imminent.

$760 million kind of net-new TCV wins this quarter, almost 2x that of your run rate in the last two quarters. So, are there any signs of a fatigue in terms of deal booking or given that especially these two, three verticals, BFS, Insurance and Tech have been doing well in the last few quarters, any fatigue of client spending here that you're picking up or things are still going on strongly in these areas?

Sudheer, again lead indicator is pipeline. We've broken out the pipeline by BFS, non-BFS. We've broken out the pipeline by top 10, non-top 10. And I don't think we use the word fatigue in dealmaking in our lexicon because that's just not the way we can sustain the growth. Remember, when we bottomed our business in December '23, we called for BFS and TMT to lead growth. Then a couple of quarters ago, we called for Insurance turnaround visible, and as you can see, Insurance has grown 20% plus sequentially this quarter because we converted deals. I think pipeline is fairly active across multiple segments including Logistics, including Healthcare. So, all we have to do is just diligently work. Each of these verticals operates at a different rhythm. But I would not say that we are at a point where despite converting $760 million in the quarter, our sequential growth in pipeline is 16%, which means our propensity of originating conversations, turning them into qualified deals and running them through the solutioning process continues to be fairly high. So that virtual cycle of originate, solution, sell and execute is something that we're very focused on.

One last bookkeeping question to Aravind. So, what is this other assets increase? It increased very sharply during the quarter. Any color on this?

Sure. There are two, three factors coming in, right? One is that under IFRS 15, where you have a fixed price project, where you have completed deliverable on a percentage of completion, until the deliverable is accepted, it comes as contract cost. And as you know, you've seen a sharp increase in our fixed price revenue. So that is one of the big contributors for this. This will get translated to unbilled as soon as the deliverable happens. Most of these are completed projects and we expect that to move to unbilled in Q2. The second element is some of the large deals requires savings to be kind of given upfront, which ends up being a contract acquisition cost. You've seen the kind of TCVs that we have declared in this quarter. So that has kind of come in, but there is not the similar level of cash outflow. So, if you really look at it, you would see the other liabilities also go up because it's more a balance sheet item in that sense both from an asset standpoint as well as the liability standpoint.

It looks like a very tightly executed quarter and quite impressive at that, because if you look at EMEA sort of declined, we have had the top customer decline, we have the ATM business has declined and still we sort of delivered this solid growth. Just if you could just contextualize the growth that we saw in both BFS and Insurance. All of these are just closures of the earlier wins, or they were something that incrementally came through the quarter, which surprised positively? And just as a follow-up is from a deal win perspectives overall, what's driving this change for us structurally? Wherein our deal wins are extremely solid, our pipeline still continues to grow. So, from an organizational perspective, if you could just quickly summarize the changes that you made that's sort of really driving this in a quick short summary would be very helpful.

Thanks, Nitin. Both great questions. On the first one, as I mentioned in my script, it was expected that we should be able to mitigate any headwinds because we saw the momentum of deal closures even in Q4, early in Q1 and some of that's definitely played into the conversion of revenue. Now every deal is not the same. Some deals convert quicker than the others. If there's an element of large-scale transition, you will see that deal will have some element of one to two quarters of conversion. If there is an element of taking over an existing asset i.e. a set of applications that move to you as a provider or you consolidate a bunch of providers out, then the revenue impact is much quicker. So, I think that's played into the revenue impact that you've seen in all the three verticals that grew more than 20% YoY. The only correction I want to make to your comment is that the large client decline and EMEA decline are actually linked. That's really what's driving the EMEA because we classify geos by origin of contract. So, it could be a global customer, but if there is a bunch of work that we do for them out of Europe, it will go under EMEA. It's an anomaly, but from a consistency standpoint, that's just the way we've continued to report. So in net-net, the reason we were fairly comfortable in giving you a certain outlook three months ago and all through the quarter was based on the fact that we had a visibility into the pipeline and the deal conversions and we did execute it very tightly as you rightly said through the quarter. The second question that you asked me around what's changed and what is driving the growth. The reason I geeked out a little bit on this call when I explained to you what we did with a large financial services customer was to give you a peek of what kind of technical expertise is driving these kind of opportunities. I think gone are the days where clients had a need, you would meet that need through potentially a series of engagements that were in one shape or form, a combination of capacity, right-shoring, and even if it was a fixed price or a managed services contract, it was really P times Q plus margin pricing. Today I think we are bundling a fairly sophisticated technology solution into every proposition. This doesn't happen overnight. It's taken us seven or eight years using our Tribes and Squads construct starting 2018, 2019, infusing our Next Labs starting 2017, 2018, and then 2023, we announced Mphasis.ai. I think they're all coming together combined with the extreme account-based focus that we've been talking about for many years now, where we have a three-in-a-box model at every account. We have a high touch model; a high-tech model and we make sure that we have to deliver to what we commit to the customer as well. So, there's a high trust aspect of that as well. So, bunch of things that we've done over the years, bringing them all together, making it real for the customer in solving a problem that sometimes a customer didn't see or many times we co-created or co-ideated into creating the right set of problems to solve for. So, the shift left that we talked about with Front2Back TM is actually playing into our strengths today. And the proactive dealmaking is what's really driving a change and a differentiation. There is a certain degree of fatigue with customers, where they have incumbent providers, large providers, the quote-unquote Tier 1 providers, who have really in a way started to become a lot more stale because they haven't kept up with the level of investment and the level of high touch and intimacy required for transformation programs. I gave you a long answer but it's a bunch of things that have come together. But at heart, it's the tech depth and the ability to bundle that tech capability into a proposition that the client sees value in.

On the deal pipeline, right? So we have won $760 million this quarter and still we are talking about pipeline swelling up on a QoQ basis. I know we formed a large deal team and there's been a lot of focus around that. But given where the macro is and what the other peers are suggesting in terms of deal pipeline as well as conversion, what do you think is specifically driving this significant growth for us?

So, Rishi, again, I think Nitin asked a very similar question. Answer is not very different except that at this point in time, at least for the last four to six quarters, we've been trying to focus on individual account-based activity, highly contextualized solutions, while making sure that at a broad level, we continue to invest in areas where we think there's going to be broad adaptability. Themes like application transformation using cloud-native tech, legacy modernization, mainframe exit, infusing AI into the way you run operations, both IT and business operations, right, predictive, preventive, self-healing. So I think investing in broad themes that we think will cut across segments and customers, but then customizing those very highly into the account using our account CTO model, I think that level of intimacy and customized solution to the customer is very attractive. Combine that with the fatigue that they have with some of the legacy providers, that actually makes it a very happy, fertile hunting ground for us. And the role that the large deals team has played really is in institutionalizing the process of ideation, deal origination, deal qualification, deal solutioning, pricing, price benchmarking and then of course, the deal dynamics of how you actually run the deal through a process including reactive deals. So, we've seen an uptick in win rate on the reactive side as well, where we participate in RFPs because not every segment or every industry or every geography is conducive to proactive only. You may originate a deal but that will go to RFP. So, I think it's the culmination of all the work that we've done over the quarters and over the years. And we finally kind of managed to get that virtual cycle going and we want to just keep feeding it as much as we can. And by the way, what you're seeing in the pipeline growth is the qualified pipeline, right? We obviously have a top of the funnel pipeline that we start the deal discussions with. So, I think that's the best way for me to explain it to you. I know it's a little bit of a qualitative answer, but our business is services, our product is trust and we are expanding that product by actually infusing platforms and repeatability and execution capability into it.

If you look at last three, four years, right, I mean, we've had issues around DXC, DR, SVB and then this overhang around the Logistics client. Is it safe to say that as things stand today, we do not have any major risk around any parts of the businesses and from here on growth would be normal and completely based on how we are executing on our overall business?

Yeah, I think that's fair to assume. I think I answered to Sudheer also earlier. As we stand today, we don't see any of that. Again, that's a point in time today. And part of the reason why despite this kind of deal wins, we are still focusing on executing in Q2, Q3 and Q4 is because of the environment. So, it's not like there's any tailwind in the environment at all. It's really we have to go and create those opportunities and run them through. And as more and more clients adopt these kind of solutions, we just have to make sure that we keep refreshing our existing contracts and engagements with them as well.

My first question is on the revenue conversion of these deal wins, the ramp-up schedule that you expect on the deals that you won. So, should we expect the best-ever deal win reflecting in a strong bunched up quarter in the coming quarters or would you say that the benefit of these deals would be spread out through this year in FY26?

Sorry, I didn't catch your name, so excuse me for that. But the way to think about it is that it depends on the type of deal. There is a nuance to certain deals can ramp quick, certain deals require a period before they can ramp. And I think this is a fairly balanced set of deals that we won. If you look at the four large deals, not all of them will have the same trajectory of ramp-up while some of them already actually contributed to Q1 as well. So, it's fair to assume that on an average one to two quarters is a decent assumption to take for conversion from this TCV to revenue.

My second question is with respect to some of the operating metrics. So, your headcount seems to be largely flat on a sequential basis and the utilization levels have sort of inched up quite a bit and which is sort of a level which we've not operated in the last many quarters. So, in the context of the deal wins, which are very strong, how should one think about the divergence between the two?

We've been kind of talking about the increasing divergence between headcount and revenue growth, right? If you look at there are a couple of shifts that have happened. One is that we've seen a significant shift towards fixed prices, right, compared to what used to be only T&M. So Sulabh, if you look at it, like I said, this is not something that is new in terms of a divergence between revenue growth and headcount. If you've seen our business, we've seen a significant shift towards fixed price, which kind of lends itself towards more productivity and ability to drive revenues with lesser headcount. Supply chain parameters are a little different than how we have historically looked at, right? It is a little more nuanced. It's not a single strategy of just hiring freshers and you playing the entire pyramid in that sense, right? So, you may have to invest in very differentiated skill sets, but that may not be at scale. And so, to that extent, it's a pretty dynamic approach that we take to supply chain. So, I don't think our growth will be limited from a headcount. It's no longer a lead indicator. We will do what it takes on the supply chain to deliver what our customers need at the most efficient cost price. Nitin Rakesh: And also keeping in mind the environment from a supply standpoint, I think it's fairly conducive for us to run this rolling 90-day plan on supply chain with a certain element of internal rotation combined with just-in-time onboarding. I don't think we need to run a large bench as we used to do historically because the model itself is shifting from just being people-based services to platform or technology-induced services. So that gives us a little bit more operating leverage.

I actually had a clarification question on the Logistics segment, while you talked about expectations of recovery from here on, there was some large transaction that you are chasing outside of the large customer or the top customer there. If you could talk about progress on that front? And the second question is how should we be thinking while you alluded to the change in our hiring or the delivery models? But given some of the newer opportunities that we are essentially trying to target to a combination of AI and the legacy modernization piece, should we probably be thinking about our utilization rates being sustainably better compared to what we've seen in the past?

Yeah, On the first one, I don't recall that we talked about any specific deal. Normally we don't talk about deals before they actually close. So maybe there is a little bit of confusion as to whether it was us or somebody else. But reality is that pipeline continues to be pretty robust, and we have visibility into deals that exist in verticals including Logistics and Travel. Part of the reason why we believe that we will see a gradual recovery through the remainder of the year is because we think we should be able to move the needle with some of these deals that are in the pipeline, and they have been for the last few months. On the second question, I think it's fair to assume that utilization will probably be elevated compared to the last three-year average. But as I mentioned earlier, it is not a control metric for us. It is actually an outcome of the actions we take on how we onboard and how we manage the supply chain. We typically don't manage to a utilization. We manage to the visibility of demand on a rolling 90-day basis. And between internal rotation, reskilling, upskilling and external hiring, we try to meet the 90-day rolling basis through our supply chain teams. So again, utilization is a metric that has been important for the last 25 years, but I think it's not going to be as important. Not that we will not have people or we will not add people but it's just that it's not going to be a linear correlation between utilization and revenue growth.

Just wanted to get clarification on the deal wins. Like what were the components from the new clients or from the existing clients or the GCC's part in the deal. What is the nature of this deal win? Just some clarification over there.

Actually, we have called out the four deals in our press release as well. And they are quite widely spread between existing customers in the top 10 category, customers that we acquired over the last two years, and potentially, the pipeline also is fairly widespread across BFS and non-BFS as well as top 10 and non-top 10. So, it's not one vertical, one customer or any specific item. I think it's been an attempt for us to broad base that over the last many quarters and that's kind of what's playing in, right? But again, given that BFS, TMT and Insurance have led it, you can assume that that's kind of been the growth drivers from a deal win perspective as well. And we'll hopefully, as I said, expand that to other segments soon.

Lastly, like you might have answered this question, but we saw huge uptick in the Insurance vertical in this quarter. So, what led to that growth? If you can just clarify that.

You know, it's okay. Our business is very simple here. You sell more, you bill more, you bill more, you grow more. So, we've sold more deals and we managed to convert them to revenue over the last three months, and I think we have a lot more in the pipeline that we'll continue to focus on closing in that segment as well. Both combination of existing client giving us a large deal as well as new logos that being signed, which again give us the confidence that we will see some more growth in the coming quarters. And of course, the quantum of growth on a sequential basis may not look as much because now we're already at the new baseline for Q1.

The investment on 3rd July, though those are small, but just wanted to understand the nature.

Aravind Viswanathan: So that is an investment of a capital nature, Sandeep. It's not a P&L kind of investment. Nitin Rakesh: Let me take that one. So, Sandeep, we made a strategic investment in a venture called 'Aokah' which is essentially a GCC advisory firm being setup by the ex-founder of the Neo Group. He still is a shareholder in the Neo Group, but they've decided to set up a separate venture to advise enterprises in the global GCC space. We made a minority investment. We put in $4 million for a 26% stake, with a view that we will essentially have an opportunity to shift left in helping shape deals as clients start thinking about GCCs and the various shapes and forms that it takes. That is not a business that we think will fit well if it was within Mphasis. So, we decided to take a strategic investment approach and use that opportunity to create new client engagements, not just in the GCC advisory, but then in the follow-up execution of those deals as well. I think we made a detailed press release on that earlier today. You should be able to find more details in the press release.

There was a second investment in Locate Software. So, is it M&A?

So that is one of the other consolidation deals, Sandeep, that we've done as a customer. It's a very small deal, right? It's not an acquisition. It's basically a vendor consolidation initiative where we have taken over the people and the contract has been given by the customer to us. So of course, the accounting treatment and the disclosure follows an M&A accounting. Typically, we don't take over an entity. We are not even rebadging. We are hiring people, and the contract comes with the customer. And there is a contingent consideration for the person who used to run that business. And therefore, it takes the nature of M&A accounting. There will be no goodwill. It all flows through the P&L, and the deal economics factors this cost which gets amortized and meets the margin threshold. So, it's something that we've done in the past and it's one more of that.

My question is for Aravind. Aravind, is the INR12 billion increase in the current quarter in other assets entirely deferred contract costs?

So, like I told Kawal, there is a split between what I would call will go into an unbilled revenue, right? Because it is unbilled revenue of the fixed price projects, which goes into contract cost right now and the rest of it would be a combination of some of the investments we have made on building IP as well as contract acquisition cost.

And Aravind, what will be your receivables if you include the contract costs as well for the quarter?

The only point I will make with respect to that, Kawal, is there is also a liability against contract acquisition because these are accounted but not paid, okay?

So, let's basically take on a net basis, gross and net basis.

Well, actually it doesn't change, to be honest, because you will see the same kind of increase on the liability side with respect to contract acquisition cost.

And the third thing is, Aravind, there is a massive increase in contract other assets in the noncurrent part, which means that there are certain fixed price contracts in which maybe it will remain unbilled or remain in contract assets for more than 12 months. So, what's the nature of engagements which is causing such a big shift on a one quarter basis?

So typically, the fixed price unbilled that I talked about, that comes in the current assets. Typically, a contract acquisition cost comes in non-current assets. So, these are deal savings which gets spread over the term of the deal, and therefore, that gets into non-current. The fixed price kind of example is much more the contract cost and not the contract acquisition cost. So, the nomenclature is a little similar, both come in other assets, but what was in non-current is more what is the amount tagged to, which will get recovered over the deal value as a contract acquisition cost, the other one will be more on the current side.

Right. And the other financial liabilities is just the other part of the, what I would say, revenue in which there are unearned and etc, lying in presumably. Is that correct?

Yeah. That would be correct.