Hi, thank you for the opportunity and congratulations for the steady performance. I actually just wanted to get your thoughts on a couple of internals. If I look at our revenue split up, we had basically seen a significant increase in our software license revenues through the more recent quarters. And this quarter, that number essentially has come off. And with the comment that you made around completion of pass-through or software licenses with some large customer, are those two things related? That's question number one. The second question was with regards to, while you called out for the quantum or the impact of wage hikes that you are implementing for your workforce, if you could help us with the quantum of wage hikes and how do they compare with, possibly, what you've given in the more recent past?
So, there are two things. When you are talking about the revenue reference to the software license, there are two components of it. One, as you know, that we have a couple of proprietary products and plus our SASVA licenses, which are sold in the form of licenses. So that constitutes the revenue part. Many times they are sold off in a direct fashion and that's where they are sort of visible there. Sometimes they are basically incorporated as a part and parcel of our overall large deal. So, it's not an apple-to-apple comparison necessarily on that. The aspect which I mentioned in reference to the cost, it is not linked to the revenue that you are getting. This is a part and parcel of a larger commitment that we had made a couple of years back as a part of the large deal. And that license commitment is now coming to an end. [Follow-up]: It all depends upon how some of the deals get structured and the commercial construct around it works around. So, I don't want to right now call out that there is any specific trend that we need to focus upon. The current range what you have seen for the last couple of quarters is what you can assume will continue in the next few quarters also. [Sandeep Kalra]: So Manik, let me just add to that. So, if you look at it, this entire tech services industry is moving in a slightly different manner going ahead. So, if you've heard of a concept called 'software as a service', now people are talking of 'service as a software'. What it means is if you are to do AI-led transformations, some of the things people will basically have where you will bundle an entire end-to-end solution, which includes a software. Software ARR will also flow through providers like us. The service is on top and you are responsible for the outcome. [Vinit on wages]: Yeah, with reference to your second question, with reference to the wage impact, as I said that the wages are in line with what we have provided. They are in line with the industry standard and pretty much in line with what we have provided to our employees last year.
Hi, so fantastic results. Thanks for such a great performance. Just wanted to ask how much of this margin expansion that we are seeing here is coming from your realized pricing piece versus other components like a mix or offshore or a pyramid kind of a rebuild piece?
So, if I understand your question correctly, you want a dissection in terms of how much is driven by offshoring and how much is driven by pricing, etc., right? Am I right? [Shrenik Mehta: Actual price increases that you do with your customers.] See, in terms of offshoring, if you look at it, our ratio in terms of our offshore headcount has been in the 85% range that has been largely driven... you know, that has remained in that range of more 85%. And we think it's at the optimum level and continue to remain at the optimum level. Anything in terms of pricing, we continue to go. We have COLA clauses that are being defined as a part and parcel of our contract. We take the customer into confidence before we implement that. We go with the right role, right pricing strategy whereby we go and ask the customer for tenured resources who have been working with them for a longer period of time, go and ask for incremental pricing if these resources need to continue for even longer period of time. So, all of these levers are at play at multiple points of time. There is no specifically one focus area that continues to remain. [Follow-up]: So, see, we don't give forward-looking guidance. We have mentioned, aspirationally, we wanted to improve our margin by 200 to 300 basis points. We are already running 100 basis points up this year. There's a possibility of another 100 basis point we will try to improve in FY27, which will bring us to that 200-300 basis point improvement range.
Hi, thank you. So, a couple of questions. Firstly, we had very strong deal wins this time. So, do you expect that the growth momentum could accelerate in the second half because of that? Or do you think the normal season will be played out and hence we shouldn't expect much acceleration? The second question is on AI. I understand that you're proactively providing to clients with solutions, doing proactive reach-outs. I'm sure clients will be asking for productivity benefits leading to pricing deflation. Is that a fair assumption to make right now? Or you're not seeing much pricing deflation play out as of now?
Bhavik, you know, we don't give forward-looking guidance. So, I won't kind of comment on that. Facts and figures are there in front of you. [Second question response]: I don't think it's a question of pricing deflation. So, the way it works in some other cases is it's the scope, inflation-deflation, that is the case. It is not about the pricing per unit. So, if you look at the overall scope, if we are able to impact that by doing AI-led transformations or by bringing in SASVA if we can do things better, faster, and lesser human manpower-related thing, it brings the overall cost there. But if you look at our billing rates as well, whatever we give us realization if you look at the details of whatever we share, it's fairly consistently moving up.
Hello Management and hello Sandeep. Thank you so much for the opportunity and congratulations on a strong quarter. I've got two questions. So one is first on growth. So another good quarter. I wanted to check on the TCV. TCV has picked up quite well, 15% growth YoY. However, if you look at the cut to it, it's driven by the ACV growth which is quite strong, and also it is actually driven by the existing business growth. So just wanted to understand that, while this year again probably it's going to be a strong growth year, how do you think this decline in the new TCV would fare us for next year which is a $2 billion target. So, first question is that.
Yeah, so if we were to look at the TCV versus ACV, out of the TCV of $609.2, $350.8 is new business. Out of the ACV of $447.9, $254.4 is the new business. And if we were to look at historically the ACV, TCV for new, this bodes well. And please remember, if you look at the ACV part, the ACV is what is the next 12 months. And when we look at the TCV, it is more than 12 months. So, the revenue realization for any period, whether it is any quarter, any year, any years, will be a combination of ACV already booked, in-quarter ACV that we will book from here till that period, and the multi-year deal conversion that comes from the TCV. So, we are relatively confident, unless the macro and other things pan out differently, this bodes well for the future growth. [Follow-up on margins]: Sure. So, the short answer on the second part is, yes, on the margin trajectory, we have traversed very well. We had said two years back that we wanted to be 200 to 300 basis points above where we were, and we are nicely trajecting on that. At some point in time, you know, we have to obviously not try to optimize beyond a certain percentage. We have grown very well. We need to continue the growth. And in terms of the bookings, et cetera, so it's not driven by one or two customers. It's a broad-based growth.
Yeah, thanks. Thanks for the opportunity and congratulations for an all-round show in this quarter. And Sandeep, first question is, this is the sixth quarter in a row where we are doing significantly better in terms of BFSI and Europe, where both these segments have grown at a high single-digit for six quarters in a row. So, what different we are doing and what is leading that? And are they inter-related to each other?
So, Sandeep, they're not related to each other. The growth in Europe is driven by some of our hi-tech customers where we're doing... where we had won significantly large deals and they have ramped up. So, that is as far as the de-linking between the BFSI Europe growth is concerned. As far as BFSI is concerned, again, as Jaideep mentioned in his comments, we had won certain deals in different set of customers. So, we had won a fairly large deal, a consolidation deal against a tier 1. Similarly, about two years back, we were brought in as a challenger in one of the fairly large Fortune 100 customers from a financial services perspective. That has also ramped up very well for us. So, it's a pretty broad-based set of wins which have ramped up. [Follow-up on healthcare pain]: So, I wouldn't characterize it as we were suffering from any 'pain' or something. When you book larger deals, larger deals typically go through those cycles of where you're ramping up, you're offshoring, you're optimizing, and then you are carrying on with more wins, etc., and so on. So, if you look at what we had said the last quarter as well, we had said that over a period of time, healthcare will also grow back. So that's where it is. And we are offshoring in some of the larger wins we had, and we have a fairly good pipeline. So, nothing to worry about any particular customer or any set of customers in healthcare.
Thanks for the opportunity, and congrats on the quarter. Sandeep, last quarter, you were a little worried about uncertainties. How do you see things now? Have things improved directionally? Deal wins also seem to be pretty good. So just want your thoughts on how do you see the broader outlook, at least from a demand perspective? Does it seem to have improved? Any color from a vertical perspective will be helpful.
As far as the demand environment is concerned and the bigger macro is concerned, the macro remains interesting and it keeps on going through its own challenges. You may have heard the multiple news that keeps on coming up weeks and quarters in the US. So, I wouldn't say that the environment is changing that much, but I think the people are getting used to working in that environment. And so, the pipeline is good. The pipeline, I would say it's broad-based and that is reflecting in our order wins. And I'm hopeful that the industry should also be showing good order wins as we go along. So, from that perspective, things are changing. People are opening up a little bit more. And we should see across the various industry verticals. And we have said earlier as well, as far as we are concerned, we are seeing BFSI lead the growth based on the wins that we have, the ramp ups that we are seeing, the future pipeline that we are seeing, followed by hi-tech. And healthcare is going back to growth after one quarter of a dip, which was more kind of to do with few deals, offshoring and so on and so forth. So overall, we are relatively confident.
Hi, thanks for the opportunity and congrats on a pretty broad-based growth. We wanted to understand what's the impact of AI on, especially the renewals where you're signing. Is there enough velocity to offset any productivity benefits that you're giving?
Yeah, so I would say it's early days for AI to be significantly impacting the renewals. The way it is happening is, yes, we are proactively, even before renewals come. So we are not waiting for renewals for someone to come and wake us up and say, hey, this is a renewal deal and now what will you do with AI? Wherever we can go proactively to our customers, and we have a program in the company where we are focused on the top 100 customers in a very rigorous manner, top 100 customers give us 82% plus of our revenues, we are proactively taking AI-led propositions, whether it is our existing book of business, whether it is newer ideas that we have. So, from that perspective, the proactivity has helped us. We are positioned very well to capture unfair market share of the AI initiatives in our customer base. So far it has not negatively impacted us and we hope it remains that way by proactively approaching the customers. [Follow-up on utilization]: [Vinit Teredesai]: So, Ravi, utilization is just a factor of the demand and supply situation. At this point of time, looking at the market, looking at our ability to hire from the market and deploy it back on these positions, I think we are very much comfortable. So, we will continue to remain in this range for quite a while. And we have mentioned that over a period of time, the comfortable utilization position will be somewhere between 83 to 85%. At this point of time, at least for the next few quarters, we anticipate the utilization levels to remain pretty much at that rate.
Yeah. Hi. Thanks for taking my question and congrats team for a very solid performance yet again. Sandeep, just wanted to pick your brain on the Healthcare vertical. It has been basically the cornerstone of our growth over the past few quarters. Going forward, of course, I'm sure it's going to pick up in momentum again. But at the macro level, there have been concerns about some of the headwinds that the vertical is facing, especially in the government spend front because of the big beautiful bill. What is our conversation in this vertical like with the clients? And how do you see the pipeline of deals in this vertical standing where we are today?
So Vibhor, you are right. So, this sector has been an impacted sector, if I may say so, in simple terms, from the various decisions under the Big Beautiful bill and other things that the new regime has undertaken. Now, the reaction from that from our customers is that's the hand that has been dealt to them. Now, they have to deal with that in the best possible way, whether it is about redoing their supply chains, whether it is about redoing their cost basis. Because if a number of our customers, let's say scientific instruments and medical devices, where these people, their equipment, their software is consumed by research labs, universities, many other systems, hospital systems and others who have grants and so on, which are impacted by whatever has happened in the last, you know, 3-6 months. Now, if they have to optimize for it, they need to be much more efficient. And that's where we are trying to be a part of the solution, working closely with them. And so the pipeline is good. We have to execute. [Follow-up on diversification]: So, see, healthcare, again, it's not one monolithic vertical, there are four different, you know, segments in that. There's scientific instruments, medical devices. The second one is pharma. The third one is payer. The fourth one is provider. Today, our healthcare vertical is at $100 million a quarter. We are sub-verticalizing this. And as we get to our $5 billion over the next 4-5 years, we should be at, you know, $100 million per quarter in every sub-vertical. [Follow-up on guidance]: [Vinit Teredesai]: Yeah, I would say, if you look at it, last year, we delivered a margin of 14.7%. If you look at that trajectory, we are probably in the 15 point... somewhere around 15.9 to 16%. Next quarter, there might be a little bit of an impact on the account of the points I mentioned, particularly on the wage impact. But on an overall note, if we are looking at our current trajectory, we are looking at 100 basis point improvement in FY26, and probably another 100 basis point in FY27.
Hi. Thank you for the follow-up opportunity. This question was with regards to our segmental margins. When I look at our segmental margin trends over the course of last several quarters, it appears you've made a significant improvement on the tech side. If you could help us understand what may be driving that, that will be helpful. The last one, Sandeep, basically from my end is that, if I look at our headcount split across geographies, we see that over the course of last 12 months, we've seen a significant improvement or increase in our India-based headcount as compared to the trend that we are seeing in the prior 18 to 24 months when we stepped up the North American headcount. Given the current situation, do you think what we've seen in the course of last 12 months is what is going to continue over the foreseeable future?
So, I'll take a stab, and Vinit, if you want to add. So, if you look at the tech side, that is where if you look at the deal wins we have been announcing, we've been announcing deal wins which are based on our utilization of AI tool that we have developed, the platform that we have developed like SASVA. Now, when we do that, we are able to win the deals against competitive landscape, use lesser manpower combined with technology, but we are able to get the realization which is better than just, you know, plain simple, what people realization would have been. So that's where our profitability improvement is coming. [Follow-up on geo headcount]: Yeah, so look, there are structural changes that will happen in our industry, whether it is because of the H-1B regulations or otherwise. And if you look at Persistent, we were never dependent on H-1Bs. So having said that, the headcount in a geography like US also depends at points in time based on the larger deals that we win. Initially, we need higher headcount there, then we optimize, and then comes the next deal and so on and so forth. I don't foresee, as of this point in time, any major change for Persistent per se. We may invest in near-shore centers or onshore centers, but as we are growing in percentage terms, I don't think it will be structurally very far from where we are.
Yeah, hi. Good evening, Sandeep and very good quarter. You know, all the larger peers are also talking a lot about investing in AI platform, AI-led services, etc. Now, we have won a large deal in financial services against a tier 1 incumbent. The question is, when it comes to taking on these larger peers, what is our right to win? Is it that our AI proposition is better than them, because they have the mindshare of those large customers, they have the domain expertise, and now they are talking about AI? Or is it just nimbleness and sales focus?
Yeah, so Abhishek, good question. But if you look at a slightly longer range, if you look at the last four years, our compounded annual growth rate is about 25%. So, if you look at that last 8 quarters, 16 quarters, CQGR, there's a significant outperformance Persistent has set. So, when I said four years, the reason I wanted to say four years is AI fever that we see everyone talking about AI is the last two years. And I would still believe that the AI-led revenues for everyone are not in double-digit percentages as of this point in time. So, so far, we have had the capability over the last several, several years, even from the time we went IPO till now, if you look at it, we have had 17%+ CAGR. So that is relatively much different than many of the others. So, whether it is traditional work or AI-related work or capabilities, whether it was software or OPD kind of work, or it is data and AI, we have been consistently building capabilities. So, I'm not worried about anybody and everybody building AI capabilities. It has to be the way. That is the way the whole industry is going, so everyone has to build those capabilities. We have to build them faster than the fastest competition and move faster in terms of our go-to market, be closer to our customers and provide them differentiated services, differentiated experience.