Hexaware Technologies

“So while we are not sharing a specific number for the quarter, what I would like to call out is we expect Q4 to follow the seasonal pattern you have seen from us in previous years. And in previous years, Q4 basically has the usual effect of furloughs and fewer working days leading to a sequential decline.”

“In this client, in addition to the current deal we are pursuing a separate large IT cost optimization opportunity.”

“In the manufacturing vertical we have been selected by a global data storage company to build on an agentic AI factory.”

“Financial services grew 3.0% sequentially and 2.4% YoY.”

“This affected Q3 and will continue to have an impact in Q4.Absorbing this headwind, we expect FS to grow full year though it will be below the company average.”

“Healthcare and Insurance declined 40 bps sequentially but grew 6.3% YoY. The sequential softness was mainly due to lower asset revenue offset by volume and calendar benefits.”

“Healthcare and Insurance will be one of our strongest YoY drivers for the company on a full year basis.”

“Deal closures as we have called out earlier have started converting into revenues and the vertical grew 1.8% sequentially and 3% YoY.”

“Now, we can actually see all of those close in Q4. We can see some of them close in Q1. The short answer is I didn't have enough information right now to be definitive about when they'll close and project that out.”

“Of all the ones that we'd entered in, at this point in time, there's only one that is pending and only one where the result was negative for Hexaware. But everything else, Hexaware has actually come out as a winner.”

“With the AI wave ,some clients are actually going slow in terms of setting up GCC because they are inducing AI in their current operations and getting to a newer baseline from a cost perspective before they decide on doing those setups.”

“Largely, they are centered around two verticals, one is in H&I, the other is in Travel and Transportation.”

“Now, over the past year or so, what we saw was a significant number of our large clients went through this process—close to 13, if you recall what we called out in our last earnings call.”

“On margins, reported EBIT for the quarter was at 12.2%. This quarter included 160 bps of items that we have adjusted for, resulting in an adjusted EBIT margin of 13.8%.”

“We announced our merit increases yesterday to the organization, and the merit increases are going to be effective from the first of October. This is one of the first decision that Vivek has made immediately after joining. The merit increase impact is close to 100 bps.”

“Next quarter margins would have headwinds from seasonality and merit increase partially offset from tailwinds from better realization and operational improvements including the uplift from the Netherlands entity closure that I spoke about earlier.”

“From a margin perspective YTD Q3 our EBIT Margins have been at 13.6%.”

“Our onshore mix increased to 53.1%, this reflects the impact of rebadge-led engagements and recent ramps.”

“Our closing cash and investment balance was close to $200 million, an increase of $23 million sequentially, mainly driven by operating cash generation. We continue to be debt-free.”

“The last 12 months operating cash flow is close to 110% of reported profit.”

“As a preferred partner in the cloud partner network, one of only a handful of India-based tech services partners, we will power our platforms with Anthropic's models, gain early visibility into their roadmap and starter kits, and access their new capabilities.”

“the short one-word answer for that is we don't see a material impact in terms of revenues because the revenues were already transitioned to offshore locations.”

“In the second year, SMC is falling short of those ambitious targets. Some of this is also due to a bit of a change from an industry perspective.”

“On CyberSolve, which was the acquisition that we did in the security space, is performing really well compared to what we had estimated at the beginning of the transactions when we did the assumptions with respect to the enterprise valuation.”

“In the first year of performance, they delivered on those numbers. And a material chunk of those amounts were actually paid out last year.”

“It is a privilege for me to be speaking with you today on my first earnings call as the CEO of Hexaware.”

“I'm glad that we will continue to benefit from his experience and counsel as a senior advisor.”

“Now, over the next 90 days, I will focus on three priorities.”

“As I step into the role, my priority is to develop a clear assessment of our client commitments, the quality of our pipeline, and the assumptions that underpin our growth expectations. I'm also going to review our sales to revenue realization process and forecasting.”

“We recognized a 530 bps earnouts reversal on SMC, while the performance of Cybersolve led to an additional 110 bps earnout charge.”

“The net impact was 420 bps credit in other income, partly offset by 140 bps of intangible amortization.”

“This quarter we saw a leadership transition at the CEO level that had a net impact of 20 bps in the P&L and that’s a one-time charge.”

“Effective tax rate for the quarter came in lower at 21%. The lower rate is because of the earn-out reversals, which are not taxable, partly offset by the write-off of deferred tax assets associated with the Netherlands restructuring.”

“All the charges associated with the restructuring has already been taken in. So effective next quarter, there will be no incremental charges associated with it, even though the complete restructuring will get over by Q2 of next year.”

“The other GSE client where we had benefited from consolidation last year is now going through a cost-optimization exercise.”

“This quarter also included approximately 3 million of hedge and translation losses. Based on the current hedge book and September-end exchange rates, we estimate losses of approximately 4 million and 3 million over the next two quarters respectively.”

“And that reflected the softness in one of our GSE clients and slower than anticipated progress in some of the large deals. Now, these ones continue to have impact even in Q4.”

“In one account , yes, there has been a bit of a delay in terms of the ramp up because it's a rebadging deal the client went slower in terms of the initial phase but it will ramp up.”

“Now we continue to maintain market share and not losing it to any competitor, however there is a headwind coming in from the cost optimization exercise that the client is undertaking.”

“Since its launch earlier this year, eight customers have already moved workloads to our AI native or cloud native environments, saving them millions in terms of workload costs.”

“We're also establishing an Anthropic unit to deepen the strategic client engagement, which will help our clients define and execute their AI priorities.”

“Already about 1,200 Hexawarians are Anthropic certified.”

“In terms of our financial performance, revenue for the quarter came in $411.9 million. This represented sequential growth of 1.6% and YoY growth of 4.3%.”

“The reported PAT was at 10.9% while the adjusted PAT was lower than the reported PAT at 9.4%.”