HCL Technologies

“This implies that midpoint of our organic growth guidance both at services and company level is broadly unchanged.”

“For Services, we feel confident to be slightly above the midpoint.”

“So, I think we are in a volatile world, and we don't want to increase our guidance. Things can change fast, both on the positive and negative side.”

“Generally, we have been conscious not to kind of create any expectations of higher growth. I mean, the environment has some uncertainties, and it's been a volatile last few quarters so we are being cautious there, so.”

“In India, we announced our plans for our first AI data center in Bhubaneswar in partnership with Sarvam”

“So, I mean, as we called out when we announced the mega deal, it's not going to contribute to any revenue in Q3 or Q4. It is going to come in Q1 of next year.”

“New deal bookings reached $3.3 billion, up 27% YoY and 35% sequentially. This is the second-highest bookings quarter we have ever recorded and gives us our strongest first half bookings.”

“An AI research company based in the US selected HCLTech as its strategic partner for a large AI factory program.”

“Advanced AI revenue reached $219 million this quarter, up 28.4% sequentially and 78% YoY. And the annualized Advanced AI revenue is now $876 million.”

“Services revenue for the quarter came in at $3,442 million, a growth of 3% QoQ and 4% YoY.”

“HCLSoftware revenue for the quarter is $294 million, representing decline of 5.8% QoQ and 11.2% YoY.”

“HCLSoftware's ARR stood at $1.134 billion, up 7.8% YoY, which is the best measure of the health of this business, and it is growing.”

“IT and Business Services grew 2.7% sequentially and 4.4% YoY, while Engineering and R&D Services grew 4.1% sequentially and 2.1% YoY.”

“We saw healthy demand towards the end of the quarter. However, we know that the environment has been fluid and very dynamic, and the demand is influenced by various factors, so we remain cautious.”

“But now we are seeing a very good pipeline and deals for enterprise implementation of the enterprise ChatGPT and number of other solutions that OpenAI has.”

“Adjusting for restructuring expenses of 84 basis points during the quarter, our Q2 EBIT margin was 19% compared with 17.5% in the previous quarter.”

“Project Ascend, including AI-driven efficiencies, gave us 73 basis points, superior margin of services offering under our Advanced AI revenue gave us 32 basis points, operating leverage at SG&A level due to growth acceleration gave us 50 basis points, and forex gave us 23 basis points.”

“On the headwinds, there was 22 basis points impact on account of higher restructuring costs in this quarter compared to previous quarter, and 25 basis points impact due to HPE Telco Solutions acquisition.”

“So, our plan for Software is to continue to plan and rationalize the cost to align it with the growth outlook.”

“We will continue to invest the gains out of our operational efficiency to expand our AI advantage by investing in capabilities, IP, and AI talent.”

“over the last 12 months, Free Cash Flow has been at $1.78 billion, whereas Operating Cash Flow is at $1.96 billion.”

“Our Balance Sheet remains strong, with Gross Cash at $2.66 billion and Net Cash at $2.56 billion as on 30th September 2026.”

“Total DSO, including unbilled receivables, is at 84 days, representing a decrease of 2 days QoQ.”

“Operating Cash Flow to Net Income conversion is 95%, while Free Cash Flow to Net Income conversion is at 87% for the last 12 months.”

“I just want to add also that we have managed our cash conversion cycle very well despite headwinds from expiry of MAT credits last year and lower non-cash amortization in Software business, which you would have seen in the P&L also.”

“HPE Telco Solutions were consolidated for 2 months in Q2 and contributed approximately 21 million in revenue, helping services sequential growth by 62 basis points.”

“Total inorganic contribution in the quarter stands at $35.6 million, which aided sequential revenue growth by 97 basis points.”

“We completed the acquisition of HPE's Telco Solutions Group, adding differentiated IP across OSS and 5G subscriber data management.”

“Finally, in our Software business, we announced our intent to acquire Robotiq.ai, a Croatia-based enterprise RPA platform provider, to strengthen orchestration across AI agents and enterprise applications in HCL GuNo.”

“Jaspersoft was consolidated for the full quarter, giving us approximately 15 million.”

“The Board has declared an interim dividend of INR12 per share for the quarter. The record date is October 16, 2026, and the payment date shall be October 26, 2026.”

“This brings our last 12 months payout to INR60 per share, effectively distributing 88.6% of our Net Income.”

“Including the one-time impact of New Labor Codes, Diluted EPS was INR67.56.”

“the LTM calculation this quarter on FCF to NI conversion has two one-time impact. One is the BAPA tax payment, which is a bilateral advance pricing agreement where we participate.”

“The second is the shift from in-house to an external gratuity trust, which contributed to some money being paid to the trust.”

“For Software, in Q1 we had a one-off restructuring cost that impacted the margins in Q1.”

“In the last couple of years, the number of PERM applications we have filed is a very small number. Hence, we do not expect the US Department of Labor decision to suspend the PERM program to have any material impact on our talent plans or client engagements.”

“Whatever challenges we kind of highlighted in the three of our Top 20 clients, we had already factored that in our guidance. Two telco customers where discretionary spending was under pressure, one Manufacturing customer where there is a steep ramp-down due to their own budget reductions.”

“Whatever we had in mind has already played out. But still, you cannot be sure, because there is a lot of discretionary spend in the two telco clients.”

“On an overall mix of the Software portfolio, we do not see much impact of AI in this, except we have a small footprint of application software, or application software products which is in there.”

“Total revenue for the quarter is $3,724 million, a growth of 2.3% QoQ and 2.6% YoY.”

“Our people count stood at 230,339 as of the end of last quarter, a net increase of 6,450 sequentially. Attrition was 12.8% on LTM basis.”

“Revenue per employee improved by 2.4% YoY, a clear sign that our AI strategy is improving productivity across the business.”

“normalized diluted EPS for the last 12 months came in at INR70.22, representing growth of 5% QoQ and 12.2% YoY.”

“Our EBIT is at $677 million, representing 18.2% of revenue.”