Financial Performance Overview

Revenue Performance (Constant Currency):

  • Total revenue: $3,650 million (-0.5% QoQ, +2.6% YoY)
  • Services revenue: $3,351 million (-0.7% QoQ, +3.5% YoY)
  • IT and Business Services: +4.2% YoY, flat QoQ
  • Engineering and R&D Services: +0.3% YoY, -3.7% QoQ
  • HCL Software revenue: $313 million (+2.2% QoQ, -5.3% YoY)
  • HCL Software Annual Recurring Revenue: $1.063 billion (+2% YoY constant currency)

Profitability Metrics:

  • EBIT: $616 million (16.9% of revenue)
  • EBIT margin improved 39 bps QoQ and 56 bps YoY
  • Adjusted EBIT margin (excluding restructuring): 17.5% vs 17.7% previous quarter
  • Restructuring expense impact: 62 bps in Q1
  • Net income: $488 million (13.4% of revenue)

Margin Bridge (QoQ):

  • Lower restructuring expenses: +70 bps
  • PDD benefit: +20 bps
  • Seasonality headwinds: -110 bps
  • Forex benefit: +60 bps

Other Financial Metrics:

  • Last 12 months ROIC: 40.7% (+257 bps YoY)
  • Services ROIC: 47.8% (+260 bps YoY)
  • HCL Software ROIC: 21.6% (+75 bps YoY)
  • Free cash flow (LTM): $1.98 billion
  • Operating cash flow (LTM): $2.14 billion
  • Free cash flow to net income: 99%
  • Operating cash flow to net income: 107%
  • Gross cash: $2.86 billion
  • Net cash: $2.84 billion as of June 30, 2026
  • DSO including unbilled: 86 days (+2 days QoQ)
  • Normalized diluted EPS (LTM): INR66.9 (+4.5% QoQ, +6.9% YoY)
  • Including one-time Labor Code impact: INR64.25

Dividend Declaration:

  • Interim dividend: INR12 per share
  • Record date: July 17, 2026
  • Payment date: July 27, 2026
  • LTM payout: INR60 per share (93.2% of net income)

Operational Highlights

Headcount & Productivity:

  • Total employees: 223,889 as of June 30, 2026 (-3,292 QoQ)
  • LTM attrition: 12.7%
  • Revenue per employee: +3.3% YoY (increased for fifth consecutive quarter)

Geographic Performance (YoY):

  • USA: +2.9%
  • Europe: +0.1%
  • Rest of World: +10.8%
  • India: +16.9%

Vertical Performance (YoY):

  • Six of seven verticals showed YoY growth
  • Public Services: +12%
  • Retail & CPG: +10.1%
  • ER&D decline primarily in Tech and Telecom, Media & Entertainment verticals

Client Metrics (YoY):

  • Added 1 client in $100M+ category
  • Added 6 clients in $50M+ category
  • Added 11 clients in $20M+ category
  • Added 31 clients in $10M+ category

AI Strategy & Performance

Advanced AI Revenue: $171 million (+10.6% QoQ, +62.1% YoY)

Five Strategic Pillars Progress:

1. Service Transformation: AI Force deployed across 92 client accounts

2. Differentiated IP: AI Force 2.2 release with new capabilities; launched Agent Store; 23 industry AI solutions

3. AI-led Services: AI Labs crossed 1,000+ engagements; AI Factory collaboration with Red Hat

4. AI Partnerships: $150M strategic investment in Sarvam AI; expanded partnerships with Google Cloud, AWS, OpenAI

5. AI Talent: 24,000 employees participated in AI learning journeys; 200+ Black Belt certified

Business Development

Bookings Performance:

  • Net new TCV: $2.4 billion (highest ever Q1)
  • Excludes mega deal signed in early July (not in Q1)

Notable Deal Wins:

  • Europe-headquartered Fortune Global 50 firm: AI-led transformation of digital workplace and enterprise networks
  • Fortune 250 semiconductor equipment OEM: AI-driven transformation across engineering and manufacturing value stream
  • Europe-based global automotive manufacturer: AI-led site reliability engineering transformation
  • Global technology major: AI Factory program expansion with incremental scope over $180M
  • Europe-based manufacturer: navigation stack engineering for next-generation autonomous robot
  • Indian research organization: secure chip development aligned to trusted computing requirements

Strategic Initiatives

AI Datacenter Business Entry:

  • Strategic investment of up to ₹3,500 crores
  • Long-term target: 50MW capacity
  • Focus on full-stack AI offerings combining datacenter design, DevOps, cloud operations, and software portfolio
  • Position as enabler of India's sovereign AI ecosystem
  • Advanced discussions with clients for committed consumption
  • Part of capacity to be consumed internally for managed services and outcome-based contracts

Acquisition Update:

  • Completed acquisition of Jaspersoft (adds visualization layer to data management portfolio)
  • Expected contribution: ~$10-15M per quarter with seasonality
  • CTG acquisition expected to close later in Q2 FY27

Guidance & Outlook

  • Maintained FY27 organic growth guidance: 1% to 4%
  • Maintained FY27 margin guidance: 17.5% to 18.5%
  • Guidance excludes impact of acquisitions (Jaspersoft and CTG)
  • Mega deal signed in July expected to have negligible revenue impact in FY27 (steady state by April 2027)

Q&A Highlights

  • Margin guidance includes ~40-50 bps restructuring cost impact
  • Datacenter investment to be funded through mix of partner arrangements, committed capacity, and potential equity/debt
  • Token costs discussion: Enterprises adopting tiered approach with smaller models for better economics
  • ER&D weakness attributed to discretionary spending cuts in two large US telcos and high base in tech vertical
  • BFSI growth driven by AI-native approach and data/analytics work for enterprise AI stack preparation
  • Healthcare vertical impacted by completion of regulatory work and US healthcare sector stress