Financial Performance Summary

Revenue: $411.9 million for Q3CY26, representing:

  • 1.6% sequential growth (1.7% constant currency)
  • 4.3% YoY growth (4.5% constant currency)
  • INR 39,331 million in rupee terms (2.3% sequential, 12.9% YoY)

Profitability Metrics:

  • Reported EBIT margin: 12.2%
  • Adjusted EBIT margin: 13.8% (excluding one-off items)
  • Adjusted PAT margin: 9.4%
  • EPS: 7.06 (30.7% sequential increase, 16.1% YoY)

One-Time Items Impacting Margins:

  • SMC acquisition earnout reversal: 530 bps credit
  • Cybersolve acquisition additional earnout charge: 110 bps
  • Net acquisition impact: 420 bps credit in other income
  • Leadership transition costs: 20 bps impact
  • Netherlands restructuring: $6 million charge (150 bps at PBT level)

Operational Highlights

Headcount: Total 35,887 with net addition of 1,381 during quarter

  • IT additions: 386
  • BPS additions: primarily for seasonal demand
  • Onshore mix: 53.1%
  • Voluntary attrition (IT): 11.1%
  • Utilization: 84.9%

Client Metrics:

  • 32 clients with >$10 million annual revenue (vs. 30 YoY)
  • 17 clients with >$20 million annual revenue (vs. 15 YoY)

Cash Flow & Balance Sheet:

  • Closing cash and investments: ~$200 million ($23 million sequential increase)
  • Debt-free status maintained
  • DSO: 77 days (78 days previous quarter)
  • Operating cash flow (LTM): ~110% of reported profit
  • Effective tax rate: 21% for quarter (normalized 25-26%)

Vertical Performance

Financial Services: 3.0% sequential growth, 2.4% YoY growth. Impacted by cost optimization at one GSE client, expected to grow below company average for full year.

Healthcare & Insurance: (0.4)% sequential decline, 6.3% YoY growth. Sequential softness due to lower asset revenue offset by volume and calendar benefits. Expected to be one of strongest YoY drivers.

Manufacturing & Consumer: 1.8% sequential growth, 3% YoY growth. Fifth consecutive quarter of YoY growth with broad-based contributions.

Professional Services: Broadly stable sequentially, 7.8% YoY growth. Reflects normal seasonality after strong Q2.

Banking: 6.6% sequential growth, 13.5% YoY growth. Strong secular growth across all three geos.

Travel & Transportation: (3.5)% sequential decline, (8.5)% YoY decline. Softness due to end client demand and Middle East conflict. Expected to remain soft full year.

TPP (Technology Products & Platforms): 7.2% sequential growth, 9.7% YoY growth. Showing good traction on smaller base.

Geographic Performance

Americas: 1.5% sequential growth, 1.1% YoY growth. Impacted by GSE client softness and high-water mark comparison from large asset transaction.

Europe: 3.1% sequential growth, 12.8% YoY growth. Supported by account ramp-ups in existing clients and new logos.

Asia Pacific: 20% YoY growth. Broad-based across verticals except for GTT softness due to Middle East macro situation.

Strategic AI Initiatives

CEO Vivek Jetley outlined three-pillar AI strategy:

1. AI for IT: Zero Friction Enterprise offerings including Zero Tech Debt, Zero Vulnerability, Zero Backlog, Zero Defects, and Zero Tickets. Zerovity platform connects context and dependencies across enterprise technology landscape.

  • Eight customers moved workloads to AI native/cloud native environments
  • Example: Saved $10+ million for secondary mortgage enterprise replacing low-code platform

2. AI for Business: Focus on reimagining business operations with examples including:

  • Bank using digital twins and autonomous AI agents for cross-border payments
  • Semiconductor company deploying AI agents for root cause analysis (90%+ reduction in mean resolution time)

3. AI Foundation: Building enterprise capabilities for AI adoption including data preparation, security, compliance, and governance.

  • Partnership with Anthropic as preferred cloud partner
  • 1,200 Hexawarians Anthropic certified
  • On track for 250 FTEs and 1,000 AI architects by mid-2027

Management Transition & Outlook

CEO Transition: Vivek Jetley's first earnings call as CEO, succeeding Keech who served 12 years and grew revenue fourfold. Keech will continue as senior advisor.

Strategic Review: 90-day focus on three priorities:

1. Strategic client engagement to understand changing priorities

2. People and execution excellence

3. Capabilities and investment choices

Guidance: No Q4CY26 outlook provided due to transition. Full-year adjusted EBIT margin range narrowed to 13-13.5%.

Q4 Expectations: Seasonal pattern with sequential decline expected due to furloughs and fewer working days. Merit increases effective October 1 with ~100 bps impact.

Acquisition Performance

SMC Acquisition: GCC capability acquisition falling short of ambitious Year 2 targets, leading to earnout reversal. Some impact from clients slowing GCC setups due to AI integration.

Cybersolve Acquisition: Security space acquisition performing above expectations, leading to additional earnout charge and enterprise value restatement.

Restructuring Activities

Netherlands Operations: Restructuring completed with $6 million charge including severance, legal, and lease closure costs. Expected to improve annual operating margins by 40 bps. No material revenue impact as work already transitioned offshore.

Q&A Session Highlights

Analysts questioned growth momentum, competitive intensity, and strategic direction. Management emphasized:

  • Pipeline remains strong despite timing delays
  • No systemic issues in deal ramp-ups
  • Vendor consolidation outcomes mostly favorable
  • Pricing pressure exists but balanced by long-term margin recovery
  • AI-led offerings key to future differentiation