Hexaware - Q1 CY25 Earnings

April 29, 2025

Moderator – Dinesh:
Good day and welcome to the Hexaware Technologies Limited Q1CY2025 earnings call. We will begin
with the presentation by the Hexaware Technologies Management Team, followed by a question and
answer session. If you would like to ask a question during the question and answer session, please select
the raise hand button to be placed in the virtual queue. The raise hand button can be found at the
bottom of the Zoom interface. I will now hand the conference over to Mr. Niraj Khemka from the
Hexaware Technologies. Thank you. And over to you, Mr. Khemka.

Niraj Khemka:
Thank you, Dinesh. Hello everyone and welcome to Hexaware Technologies, Q1CY25 earnings call. In the
call today we have with us Mr. R Srikrishna, CEO and Mr. Vikash Jain, CFO. In the course of this call, we
may make certain statements which are forward-looking and may involve a number of risk and
uncertainties. All forward-looking statements made herein are based on information presently available
to the management and the company does not undertake it to update any forward-looking statements
that may be made in the course of this call. In this regard, there's a full disclosure, which has been
included in the investor presentation and the press release. We consider that as read. With this, I'll hand
over the call to Keech. Keech, over to you.

R Srikrishna:
Thank you, Niraj. Could you go to the next slide please? One more. Thank you. So good morning. Good
evening. Welcome everyone. For all that's happening around the world we had a surprisingly normal
quarter. We expect quarter one of a calendar year to be a soft quarter always, and that's kind of how it
was. It is a flattish quarter in terms of quarter and quarter. Still a solid YoY growth of roughly two and a
half percent. Both are a little higher on INR terms, 16 and a half percent YoY on INR and a moderate
growth QoQ on INR terms. While I wouldn't call these out in a good quarter, I'll call out two or three
factors that contributed to our performance. There were two clients, this was planned, who moved their
work offshore, and then there was one program which I will talk about later that actually delayed start
and I'll say between them, they had a little over a hundred bps of revenue headwind during the quarter.
Like I said, this is kind of what we would consider normal. Wouldn't call out in a regular quarter, but in a
soft quarter I thought it is worthwhile calling out. The fact is the planned movement of work from
onshore to offshore for two clients did help improve and improve our margins in a difficult quarter. So
we've actually improved EBITDA from the prior quarter to 16.7 and actually our EBITDA in absolute
terms gone up 20 odd percent YoY in absolute terms, and our EPS is up 16.7% YoY. And finally, we have
a healthy closing cash balance as of 31st March, as we always do.
I want to spend some time on some of the investments and some of the key topics that happened
during the quarter. The first is that we expanded our footprint in Dehradun. We actually moved to a

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much larger facility. This is a good indication of the success of the location. We also opened a new 700
seater in Hyderabad. Some of you that may have seen our Chennai facility know that we have a
customer experience center there. Post-Covid, as client visits to our centers have reclined, we decided
to open two centers, one each in New Jersey, Jersey City, and the second in London. And these are
investments we've made to help get closer and bring some of our innovation closer to client locations.
The Jersey City location we inaugurated a few weeks ago and London office actually, while we've already
moved in there, the official inauguration is in a couple of days from now.
We closed our head count at 31 and a half odd thousand. This is actually net reduction from the prior
quarter. However, if you peel the onion, our IT head count went up moderately, just shy of a hundred
people, and all the reduction was actually in our BPS business. Attrition, we continue to do very well. It's
range bound. It was 10.8, it's 11.2 and our utilization as expected after a full heavy quarter moved up in
Q1. We spoke about our NPS score in the cycle directly prior to IPO. Actually since then, we've got
results for 24 because the numbers we have published at that time were 23 results. Early this year we
got results for 24 and as always, we scored very well. On NPS 67, 27 points higher than industry median.
We continue to have three clients above 75 million and 1 in the hundred million plus category.
In a variety of discussions I've spoken about what are four strategies that we have, to accelerate and
improve our historical performance and those four were; the first one was legacy modernization using
AI and more specifically we think we have a highly differentiated platform, RapidX. The second was to
open PE as a channel. The third was to expand our footprint in HealthTech and ISVs, and the fourth was
to make our Middle East and India markets count more. And I think the last one, especially in the light of
global macros, there is additional conviction that these markets, India and Middle East, will be more
decoupled from world macros than other economies. So I'll touch a little bit upon each of these to
provide a progress.
The most progress actually is in the first line, which is legacy modernization. So we did beta last year
with two or three clients in Q4. There's a lot of confidence that came from that and we decided to invest
in both accelerating the platform and in a go-to-market effort. And the go-to-market effort has been in
place essentially since Jan this year. And I'm happy to say that we have shy of 40 clients in the pipeline
for this already. And I can say that we've not had a new service that has attracted such a solid pipeline
early in the process. To be sure, all of these, many of these, are in the POC process. That's how these will
start because they tend to be very large and involved programs, but even the POC investments are
material for clients.
We started our capability with [inaudible]. We've expanded it since to COBOL and PL/SQL. I think a good
marker of success for us is when we talk the next time after Q2 that we should have moved at least one
or two clients out of POCs into real full-scale modernization order. So that will be defining what good
will look like for us in a quarter from now.
I think the second of the board for us where we've made the most progress is in the Middle East and
India markets. I think we spoke about the fact that we did a couple of JBs, I think that's on the Middle
East side and there is a very healthy pipeline in Middle East that we expect will play out through the rest
of the year. India GCC is where we have been actively looking for ways to become significant in the
market.
As a quick recap, for good or bad, we don't have a lot of footprint in GCCs and at an aggregate we see it
as a big net new opportunity because we get virtually very low millions of digits, millions of revenue
from GCCs right now, and you will hear some material updates from us in the next quarter on this.
I will pick ISVs as the third topic. I think some of you may have seen that we made a notification that
Rac, who used to lead our high tech and professional services vertical as a combined unit, left the
organization. He became the CEO of another company.

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What was in the cards, in any case, we executed immediately, which is to separate high-tech and
professional services. We have undertaken that exercise, so it'll take us a little bit of time to find a new
leader, but that new leader is going to be very focused on high tech and ISVs market. The desired profile
for us is somebody who's done this, sold into IVS at scale. And so we think that will give a boost to our
ongoing efforts in ISV.
Lastly, private equity. We think there is obviously a fair bit of discontinuity in that market right now, but
we think we will see outcomes coming through the Q3 and Q4 of this year. So we'll have more
meaningful updates for you later in the year, but I will provide every quarter a brief commentary on
each of these four. The reason is this; we've spoken about a 3 billion ambition on revenue for us. We've
said good for us looks like getting there in calendar year 2029 and even through challenging macro this
year. We actually feel pretty good about getting to that medium-term goal as a consequence of these
growth accelerators and documents. Over to you, Vikash.

Vikash Jain:
Thanks, Keech. And move to the next one. So just to recapitulate what Keech mentioned, we had a good
quarter with revenue year-on-year growth bank 12.4 percentage in reporting currency, 12.7 in constant
currency. The growth was led by four out of the six verticals growing at double digits on year-on-year
basis. We had double digit that came through a combination of both the existing accounts and new
account ramp ups. The two verticals that did not deliver year-on-year are banking and MNC. Banking
headwind is associated with project closure. That we had called out even in our last earnings call.
However, we have a very healthy pipeline and we expect this vertical to grow meaningfully from a full
year perspective. In fact would be one of the growth drivers for us at a overall company level.
MNC is expected to continue to face some headwinds. Recent challenges, whether it is in terms of the
tariff market uncertainties create barriers are leading to bit of a delayed decision making and subdued
spend. So that's the reason for MNC in terms of underperforming for some time. Let's go to the next
one. The only key point to highlight here is very meaningful set of accounts that we continue to add. So
from a last year perspective, if you look into it on an LTM basis, we have added two accounts, which are
greater than 20 million dollar and one account which is greater than 75 million dollar. We do have a
hundred million dollar plus account and as we had called out last time, hopefully by end of the year we'll
have two accounts which are going to be a hundred million dollar plus. Next.

R Srikrishna:
So Vikash, I will take back over. Thank you. I think the most important aspect of Q1 for us is a number of
solid wins that we think sets us up very well for the next quarter, for the remainder of the year. These
wins are a mix of EN and NN and I will briefly touch upon several of these.
The first one is a transnational bank that provides aid. They go through a cycle of redoing the vendor list
every five years. So this year, through last year, they went through a process early this year, they
announced seven vendors, and I think we are, maybe one more, are the only non-incumbents in that
list. What will happen is that through the course of the next two years, they will bid out 200 million
dollars per annum roughly of work, which are restricted to seven of us. So we expect this account to be,
it's a very large logo. We expect this will be a growth driver for us this year and a more material growth
driver for us in future.
The second one is similar firm in Europe and where we are part of their... we are the lead implementers
on SAP for their most important co-transformation project of back office on finance and HR. And this is a
very large program that has eyes from the top of this bank. In fact large program that has eyes from the
top of this bank. In fact, I'm a part of their business chairing committee for this. The third large global

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bank this, and I will later provide an update on some of the pipelines that we spoke about in the past.
This is a client which is still in pipeline for a large consolidation opportunity. They actually gave us a test
drive and so we want a piece of work that has several components to it, but the most important
component is app modernization and transformation.
The next one is a cool work. This is a legal advisory firm I think in a couple of weeks there is a legal
conference, legal week, which brings together the heads of many legal firms, the tech heads and
business sets, and actually an app, GenAI app-based platform. An app which we built for this firm is
getting launched at this firm at this forum in a couple of weeks.
The next one, this is the bottom left-hand corner. One of the key things happening in the airline industry
is called OnOrder, which allows airlines to distribute the products more widely, not just through their
own websites. And this is a new standard that will allow them to do that and this is actually will be one
of the first implementations in the industry for that. So this is the one-on-a-platform implementation
one. We have been going after legal as a sub-domain, we already have a top five client in this domain.
There's another one. A lot of the initial work is created because of a need to separate from China and
we have specific experience in doing that rapidly. And this is again a top 10 global legal firm.
The next one is actually a healthcare division of a very large conglomerate that's separated into three
businesses recently. And we have an app modernization and legacy modernization effort underway
here. And the last one is one of the largest pet insurance companies in the world and many parts of the
world pet insurance is a big thing. There's a lot of money that pet parents spend on pets and insurance is
a way to manage that spend better and we want essentially a strategic supplier, there's an initial set of
good set of work, but there's a lots pipeline for us to become for this to become a very material client
for us. Very quickly. Next slide please. Vikash.

Vikash Jain:
Thanks Keech. So on the margins, we are progressing well on improving margins. Current quarter saw
margin improvement of 40 bips. Q1 margin at 67.7 percentage. The 40 bips improvement was driven by
operational benefit of 50 bips, which was partially offset with currency headwind of 10 bips. And the
currency headwind for us is a combination of two factors. The underlying benefit that we get with
respect to rupee depreciating, but at the same point of time how the hedges play out because we start
taking hedges as per our hedge policies two years in advance. But you would see here that while the
EBITDA improved by 40 bips, the net profit improvement is lower as ETR has gone up quarter on
quarter. ETR for the current quarter is 25 percentage versus 23 percentage last quarter. Last quarter had
some one-time credits in our ETR. As we had guided to earlier, our ETR guidance for the full year is
approximately 26% versus 25 percentage from a full year of last year.
And what we saw in the current quarter, the marginal increase, what you would see in the subsequent
quarters is an account of some of the SEZ units coming out of the tax holiday period. And if you look into
our current quarter results, despite the currency headwinds that we absorbed in the numbers, we
delivered a sequential improvement. And this is despite the fact that we have the ERP cost is still into
our numbers, which is expected to go out in the future quarters. So we remain confident in terms of
delivering to our quoted margins of 17.1 to 17.4 percentage from a full year perspective.
Move to the next one. We are making progress on our operational. We continue to make progress on
our operational metrics and the offshore mix has improved by 200 bips sequentially. You heard Keech
state that we had two clients move some of their work offshore, plus the ramp up in the new deals
helped with the better offshore mix. Now while this is a bit of a revenue headwind, this has definitely
helped us in terms of our margin expansion. On the headcount, while there is a net decline, if you look
into the numbers, what we have given as part of the data book published with the results, you would

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see that we added a hundred net headcount, approximately a hundred net headcount to 90, which was
offset by a reduction in the BPS headcount of close to 850.
On the IT side, we have added headcount while improving our utilization quarter on quarter,
demonstrating that we have an underlying volume increase. BPS there is a marginal decline in revenue
quarter on quarter and the headcount associated with that has actually come down. We improved our
utilization quarter-on-quarter. We expect our utilization to be range bound between 82 to 83
percentage from a full year perspective.
Let's move to the next one. DSO for the quarter is at 75 days. This is marginally higher than the target
DSO level we have set out for ourselves, which is 70 to 72 days like every year. At the start of the current
year, we had meaningful number of SOWs that were due for renewal. This is basically a paperwork while
the work continues to happen at the client's end. However, it took a little bit more time than usual to
have the paperwork executed this year. The resultant impact of the same is basically delays in invoicing
and leading to a DSO increase. We expect the DSO to be back to the 70 to 72 days by the year-end.
Similarly, on the OCF to EBITDA now we have a very healthy cash balance of $225 million completely
credit-free. Our goal is to generate OCF to EBITDA on an LTM basis at 70 percentage. And we always
look at LTM basis as there cash flow seasonality primarily associated with tax and variable payouts in
between quarters.
So our OCF to EBITDA for LTM Q1 is 67 percentage, which is marginally lower than our target levels of
70% driven by the DSO being higher in the current quarter. The ETR, as I called out, ETR for last year was
25 percentage. There was some variability by quarters both ways which actually offset the impact on full
year basis. ETR for current quarter is 25. We expect our ETR for the full year to be 26 percentage. Last
from my side just to add on the dividends, we declared dividend post-a quarter close of $5.75 per share
leading to a total payout of $40 million. Keech, over to you.

R Srikrishna:
Thank you, Vikash. Could we go to the next slide please? This is our last slide and I'm going to spend
several minutes hopefully addressing several questions that you may have. I think the first and top is
really an update on our two JSC clients. I know there's been some risk perception worry about where
this will go. So here's the update. So update on client one. This is one of the two consolidation deals that
we won earlier in the year. The deal execution was delayed, but it's begun now. So it got delayed for a
few to several weeks, but it is started now. So we are all good here. The delay was not just the revenue
impact for that, but it's also a signal of what could further happen because we have a very large pipeline
in that client. So the fact that it's begun now is actually a good signal for us that whatever uncertainty
was there when the new administration took over has kind of receded.
In client two, we had a sharp ramp down. Now this actually was told to us early last week. It was quite, it
didn't happen immediately, but we had a sharp ramp down which will account for roughly 1% of the
company revenue. However, in my conversations with their management, what they said is this is our
kind of here now attempt to reduce cost. How are our most sustainable way of doing this is that we
want to consolidate, they have roughly 2,500 contractors, which they do business with over hundred
people. We are less than 20% of that, but we are the largest. And they said they want to get it down to a
very small number, somewhere between two and 10. And so that's a process that has started. So in
many ways for this client, the way we look at it is the downsides are behind us and it's in the books and
upside, potentially large upsides are ahead of us now.
We spoke on two deals that we won last time. We didn't provide a color on size of these. I want to
provide, we have more clarity on what are the book of work that will come. So really client one, which is
kind of the same one where the work got delayed, that will give us on annualized basis about $20 to $30

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million per annum incremental revenue and ramped from Q2, partial ramped from Q2. Client two, we
will get $25 to $35 million annualized incremental revenue. That again, the partial ramp is from Q2.
Now we also spoke about two very large, call it mega consolidation opportunities, in clients where we
are non-incumbents for this work. We do other work on both these clients, but we're now incumbents
for this. Both of these that have been positive progress, I'll say they're closer to a decision. In fact, in one
of them they gave us a test run. I spoke about that deal earlier. Aside from these, we have two other
very large consolidation opportunities in the pipeline. One of which I referred to already, the 2,500 FTEs.
And in that as the largest incumbent, we feel good about where we are.
The other one is in another large global bank. We have a footprint, but we are not a strategic vendor.
We have very large spend and this process will potentially put us in play for another half a billion dollar
per annum of outsource spend. Now the reason I'm highlighting these is A, of course impact on our
performance and our revenues, which is very positive. But I think more importantly also that we are
now with some more consistency getting into consolidation deals in very large customers who have very
large spends. And that's as a consequence of our focus strategy to make sure that we hunt material
logos even on day one. It starts with low or even sometimes zero revenue. But eventually these are the
clients where if you're in play you get opportunities which are very large.
So what does all this mean for '25? I think we last time said we are not going to provide guidance. We
are taking a 10-year view. There'll be up and down cycles. We are going to stick to that. We are not
providing guidance, but I'm going to provide as much color as we can. So Q2, actually our underlying
performance will be very strong. There are two I already spoke about. One of the GSC's will have an
impact of 1% of company revenue, that has already started. It was announced early last week and it's in
effect immediately. That plus another large program which ended, normally that client would've had
quite a bit of follow-on work, but their client in financial distress. So they have actually stopped follow-
on work for that.
So just between these two, we'll convert Q2 from what would've been a great Q2 to a good Q2. So we
still expect to have a good Q2, but actually underlying performance ex of these two will actually be a
very solid Q2. And that momentum will continue into Q3. So we expect to have accelerated growth in
Q3 and given some of the deals in the pipeline and the backend nature of the ramp up, we expect at this
point that we will buck the usual trend in Q4 and actually deliver sequential growth in Q4 as well and
much of this is not macro-contingent for us.

R Srikrishna:
This is not macro contingent for us. A measure of our confidence, we expect to hire 1800 to 2000 IT
people in Q2, both to serve Q2 ramp and in anticipation of Q3 ramp.
Some vertical color and Vikash touched on some of these already, we expect banking and financial
services to lead growth for us. FS already is and it'll continue. Banking, you've seen a couple of negative
quarters, but you will see a very sharp, literally, potentially double-digit Q on Q growth starting
immediately from Q2. So it will turn around and actually for the full year, we expect it to be a growth
driver for us.
TNT, I'll say it's marginal, incremental weakness due to macros over the last several weeks, but it will still
grow at roughly company average for us.
HTPS, HNI, we expect it to grow roughly at company average and MLC is where actually the biggest
impact of macros is and it will help. It has had weakness and it will actually continue to have significant
weakness.

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Finally, on margins, I want to reiterate what Vikash said. We will improve our reported EBITDA to range
in 17.1 to 17.4. We are not in the phase of profit maximization. These are what will happen naturally.
We are still investing significantly in our business. I did speak about some of the investments we've
made even in this quarter. ERP costs will be a tailwind for us. It will be the end of Q2.
Finally, on margins, there are medium-term levers to improve the margin 100 to 150 pips. However, our
here and now focus is to not necessarily apply those levers, but instead focus on using that to maximize
growth.
With that, we'll stop for Q&A. Dinesh?

Moderator:
We will now begin our question-and-answer session. If you have a question for today's speaker, please
select the Raise Hand button at the bottom of the Zoom interface and you will enter a queue. After you
are announced, please unmute yourself, state your name and company and ask your question. If you
find that your question has been answered, before it is your turn to speak, please press the Lower Hand
button to leave the queue.
We will now pause for a moment to allow the team to gather and assemble the queue.
Our first question comes from Ankur Rudra from JP Morgan. Please unmute your line and ask your
question.

Ankur Rudra:
Hi. Good morning. Thank you for taking my question.
So maybe to start with, Keech, you gave a lot of detailed outlook. Thanks a lot for that. Could you maybe
elaborate a bit more on the nature of client feedback you're getting across banks, financial services,
manufacturing and travel on spend intentions, and how widespread are your client ramp downs and
cancellations? I think you referred to two of them, specifically. Thanks.

R Srikrishna:
So I had the benefit we had in the first week of April, an annual client meeting at Pebble Beach Golf
Resort in California, and we had call it 50 clients in that location. We had conversations with a number of
clients about what did the macro mean for them, positive, neutral, negative.
I think manufacturing clients, a lot of them actually pulled out of the event. That, in of itself, tells a story
and the ones that were there clearly said we have trouble. There were a surprising few client that
actually said it's a positive for them. It was a surprise to me, but for them it was kind of, "Hey, this is a
positive for us." For example, there's an insurance client that said, "Anytime there's high volatility,
people tend to buy more of our products."
The vast majority said it's kind of a second order impact, so it's a wait and watch. They don't have any
kind of specific plus or minus plans that are in motion, it's a wait and watch.
Now, Ankur, you said something, I mentioned a couple of client ramp downs. Actually I didn't. I
mentioned one, which is a project that was scheduled to get over. Normally, there will be follow-up
work from that, but that client, because of financial issues, did not choose to continue. They've chosen
not to continue, at least for now. I can't recall another one I mentioned.

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Ankur Rudra:
So the other one is the ramp down on your GSE client where you will be hit this quarter onwards. I was
referring to those two.

R Srikrishna:
Yes. Sorry, yes.

Ankur Rudra:
But are there any other besides those two?

R Srikrishna:
No.

Ankur Rudra:
Okay, thank you.

R Srikrishna:
I mean nothing which is not on the normal course of business. Yeah.

Ankur Rudra:
Okay. So given all of this, Keech, what kind of visibility do you have into the year now, given the
headwinds you face? Do you think you will be able to sustain the double-digit growth momentum, given
you face somewhat tough comparable in both 2Q and 3Q?
And also if you can summarize the full-year outlook in a way, how should we think about it versus what
you did in the first quarter or what you did last year? Thank you.

R Srikrishna:
Yeah. So I did say that Q2, late start of Q2, right? But actually Q2, our underlying role will be solid and
actually because of the two clients that you refer to, it'll go from an outstanding quarter to a good
quarter. So we'll still have a good quarter, and those two quarter-on-quarter headwinds will go away for
Q3, and actually Q3 growth will accelerate. So we actually expect to have a pretty solid year, Ankur.

Ankur Rudra:
Okay, understood. Maybe the last question on the GSE side, just to clarify. Your second GSE client, the
impact will happen for two months in the current quarter, it'll complete in 3Q, right? Is that the main to
understanding this?

R Srikrishna:
Two and a half months, yeah. I mean, little under two and a half months. Two to two and a half months
for current quarter and full quarter from the next, yes.
But their intention, at least right now, what they've stated is that they will make pretty quick decisions
on the consolidation because that's a more sustainable path to cost reductions. Right now they've kind
of taken up, as they described it, a peanut butter approach, just uniform cuts. They haven't given

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thought to programs and things like that that get impacted. That's not a sustainable way for them, more
sustainable ways through consolidation effort.

Ankur Rudra:
Got it. Appreciate it. Thank you so much.

Moderator:
Right. Just a reminder, if you would like to ask a question, please use the Raise Hand button, which can
be found at the bottom of your Zoom interface.
Our next question comes from Abhishek Kumar from JM Financial. Please unmute your line and ask your
question.

Abishek Kumar:
Yeah, hi. Thank you for taking my question.
Keech, you mentioned that now Hexaware is increasingly participating in vendor consolidation or large
deal scenarios. So one question is what is helping us win more in these deals? And second, have you
seen more pricing pressure around large consolidation deals? Because it looks like these are the only
type of deals out there in the market.

R Srikrishna:
So I'll say, I think the first question is not even why we win. I think the first question is why are we in
these deals? Because they can only happen large, very large opportunities can only happen in very large
clients, and I think it's a very systematic effort for us to hunt material logos. And I think we've
mentioned in the past some 61, 62% of our revenues comes from clients whose revenues are above $5
billion, and that's not an outcome without a focus and an effort behind that. So I think once you get in
and you deliver well and over time you get an opportunity to play in this, right?
As of now, much of these opportunities that are in front of us, we are not CapEx fund. It's really kind of
no downside or potential upside scenarios for us in many of these. Clients have chosen not to put our
book of work into the mix or, in many cases, we are not even in that lane for that. But yet we've done
well somewhere else so they've put us in play for something larger.
Why we win the ones that we've won is I'll say it's really kind of three things. One, whatever we
executed, we execute very well. Two, we are able to bring more intensity and focus to the clients. And
three, customers love our platforms.

Abishek Kumar:
Okay, understood. Maybe one last related question.
It looks like the deal wins have been healthy. Any color on what would be the TCV order backlog we are
sitting on compared to where we were maybe a year back, and which verticals you think order bookings
are strong.
And maybe a related one is we have seen, you've mentioned a couple of ramp down, one ramp down
and one delay, so that revenue deal TCV to revenue conversion. Do you think that would flow as usual
or as we go through the year and there are uncertainty around, there could be gaps between TCV and
revenue conversion? Thank you.

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R Srikrishna:
The reason for the many gaps between TCV to revenue translation is the reason we're not reporting in
TCV. Instead, I'm hopefully making it simple for you by translating it to specific revenue range of growth
in the key deals.
This is obviously not all of the deals, but at least the large ones, we're going to try and translate to a
revenue growth over the next 12 months for you, which is what we've done for two other deals.

Abishek Kumar:
Sure, that's helpful. Thank you and all the best.

R Srikrishna:
Yeah, I think you asked about vertical. I already gave commentary on verticals. FS and banking will lead
for us and MLC will pull us down, what would otherwise been, or MNC will be a drag, others will be
roughly on par.

Abishek Kumar:
Thank you.

Moderator:
Our next question comes from Shweta Seth from Alliance Bernstein. Please unmute your line and ask
your question.

Shweta Seth:
Hey. Hi. Thanks for taking up my question, and thanks for the presentation. So I have two questions.
First is do you see any impact from reshoring in case of any risks due to any change in Trump policies?
And my second question, I'm not sure whether it's within your scope to comment right now, but just the
question will be around the refinancing risk for the bond. What are you thinking about the USD $1
billion bond that's maturing next year? What options do you have in case you're not coming to the dollar
bond market? Thank you.

R Srikrishna:
Thank you. So on reshoring, we're not hearing any clients talk about it, certainly as it pertains to our
business. You are hearing enough announcements, including IBM most recently that they're kind of
invest more in the US for manufacturing. There's nothing really about services.
But should it happen, it's not necessarily a risk for us. I see it as an opportunity. We have a solid kind of
employing brand in several major pockets around the US. I actually see it as an opportunity. The clients
want to do more in the US.
The second question we can do, like you said, the bond is not on Hexaware where it's colored.
Nevertheless, I'll say that we have good options on the table, so you should not think of it as an issue. So
when or much before the time comes, there will be an answer for it.

Shweta Seth:
Okay. Thank you.

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Moderator:
Our next question comes from Manik Taneja from Axis Capital. Please unmute your line and ask your
question.

Manik Taneja:
Hi. Thank you for the opportunity, and my apologies that I joined the call late. So if you can, I don't know
whether you've already answered that, but if you could break up the segmental performance between
high-tech and professional services in the current quarter and how do you see each of those two parts
behaving through the year? That's question number one.
And the second question is with regards to some of the challenges or the pressure that you are
witnessing with some of your GSE customers. Do you think this drives more expansion in your offshore
revenue mix and thereby some sort of a tailwind to margins as well?

R Srikrishna:
So on the first one, Manik, I mentioned earlier that we are actually going to split our high-tech and peers
and we think that will give serious growth wings to high-tech. We've done this playbook before. Banking
was embedded in a small portion of our financial services vertical. We separated it four years ago and
has actually grown quite nicely, and we've acquired some major logos in the process. We're going to do
the same to high-tech. High-tech, actually, is very small right now. So wouldn't be meaningful
commentary to talk about differential performance between the two. Much of our performance is
actually driven by PS right now, and that's the opportunity for us to do a lot better on high-tech and
hence we are going to create a new vertical.
On the second one, we did answer in some detail on it, so maybe we can follow up with you in a more
detail, but I'll tell you the high level or the two clients, one of them there was a slight delay in a
consolidation deal, but that's since started, so we are actually on good wicket there. The fact that we've
started also to us is a signal that things are back to normal. The second one, there was a sharp rundown
that was announced early last week effective immediately; that'll have an impact of 1% on the company
revenue for the year, but that is behind us. They also said they want to consolidate 2,500 vendors to a
much smaller list. And as having just shy of 20% there, and as a large vendor, we actually stand at a very
good spot in that exercise. But there was more details, then perhaps we could do that offline, Manik,
since we answered in some detail earlier.

Manik Taneja:
Sure, Keech, my clarification on this one is basically does this provide an opportunity to increase your
offshore revenue mix, given some of these JSC customers have largely been onshore service customers?

R Srikrishna:
I mean, in general, I think we will improve our offshore mix. We did improve it this quarter, but that is
not because of the JSCs. Actually, there are two other clients that have planned movement from
offshore to onshore that was a revenue headwind for us in Q1, but a margin ... sorry, revenue headwind,
but a margin tailwind for us. So I don't think JSCs will be a driver of improving offshore mix. I mean,
there is a one-time step reduction that will be an improvement for offshore, but there's still plenty of
opportunities, like I said. In some ways the downsides are behind us. We think there is potential large
upsides ahead of us.

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Manik Taneja:
Sure, thank you and all the best for the future.

Moderator:
Just a reminder, if you would like to ask a question, please use the raise hand button at the bottom of
your Zoom screen. Our next question comes from Dipesh Mehta from Emkay Global. Please unmute
your line and ask your question.

Dipesh Mehta:
Yeah, thanks for the opportunity. Two questions, just want to understand because in second JSE client
you indicated about immediate trim down kind of thing, so what factor led to it and whether you see
risk it to play out even in the another client? Second question is about the CY25 outlook, whether any
change, let's say based on what you observed in Quarter 1 and likely to see in next three quarter,
compared to what we might have expected at the beginning of year, if any changes?

R Srikrishna:
See, on the first one, I mean what led to the reduction, I explained earlier, but the client is simply doing,
and this is their words, quote unquote, "peanut butter." There was an ask from the administrator to
reduce X amount of cost and they did, and they didn't give thought to where, what programs, what they
were, nothing. That is all kind of phase two through a consolidation, a more thoughtful exercise that has
already started. There's an RFI out already and their desire is to rapidly make a decision. And like I said,
because we are the largest, we feel good about it. More than largest, we deliver outstanding work in
critical programs for that. So there's no real why except, hey, it's a peanut butter spread off the cut.
Could it happen in the other one? I don't know. It's not happened till now. More importantly, I think our
at least initial intel is that the administrator thinks the other one is better run. For example, they had
already a hundred percent work from office implemented for three days a week. That was one of the big
first things for the administration and these guys already have done it. Sorry, what is the second
question, Vikash, can you remind-

Dipesh Mehta:
CY25 outlook, whether any change based on what we observed in Quarter 1 and next three quarter?

R Srikrishna:
Yes. Yeah, listen, I've called the negatives out very specifically and tried to characterize it as much as I
can. There's a number of positives, so there's lots of pluses and deal wins. What is true is that our deal
ramp-ups are, some have started in Q2, but it'll continue ramping through Q3, Q4 and others will start in
Q3. So we will actually have pretty solid quarters ahead of us.
I'll leave it at that. I've said we won't do guidance, so I'm going to stick to that. We will have, Q2, I want
to reiterate, it would have been a great quarter, it'll actually be a good quarter because of the two
specific headwinds in Q2. Q3, those Q1 Q headwinds will go away, so we'll actually have accelerated
growth Q3. And Q4, we will likely buck the trend of a flattish Q4 and actually grow in Q4.

Dipesh Mehta:
Thanks.

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Moderator:
Right. Our next question comes from Girish Pai from BOB Capital Markets. Please unmute your line and
ask your question.

R Srikrishna:
Girish, if you're saying something we can't hear you.

Moderator:
It looks like we are having trouble getting you connected. We will place you back in the queue and
return to you later. We'll move to the next question. The next question comes from Abhishek Gupta
from Axis Asset Management Company. Please unmute your line and ask your question.

Abhishek Gupta:
Hello? Am I audible now?

R Srikrishna:
Yes, Abhishek.

Abhishek Gupta:
Yeah. So I just wanted to check on the two clients which might impact our growth in Q2 as well. What
are the kind of work which we are doing for these two clients and wanted to more clarity on the second
client which we saw a sharp drawdown, like what is the criticality of the work for that organization? Just
wanted to understand how this budgeting is happening within this corporate. Are they looking for that
criticality? Are they even considering the criticality of work to ramping down the?

R Srikrishna:
So in this one, so there are two, one is the JSE and the other is, I'll come to the second one. In the first
one we are involved in 80% of their transformation programs. Everything that is very core to their
business, pricing, underwriting, securitization, forecasting, all of their core systems, we are involved in.
Their data, we are the number one, right? In many of these, we are the number one.
So in this client, again, I said it a few times, they took a peanut butter spread approach for cuts on day
one. They haven't had time to sort through programs, deliver the excellence, criticality, any of that. But
they're doing that now. They've started an RFI process that will lead them there, for consolidation that
will lead them there. So, that's client one.
The client two, we essentially built and finished for them, handed to them what will be the future of
their company. It's a platform with four different brands. We did a new architecture to bring these
brands and platforms together that'll help reduce development effort and materially improve velocity.
So that's the work we did, which we delivered, like I said, usually it'd have continued to additional work,
but they are not doing well so they stopped.

Abhishek Gupta:
Got it, sir. That answered my question. Thank you so much.

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Moderator:
We have a last question coming from Gaurav Rateria from Morgan Stanley. Please unmute your line and
ask your question.

Gaurav Rateria:
Hi. Congrats on good execution in an uncertain environment. Keech, I just wanted to understand for the
deals where you're using your platforms, how are the contracts structured in those cases? Are there
different outcome-based models which are being explored versus the effort-based business model that
we have always dealt with in the past? Are there any new billing models that are in the works, especially
with the advent of generative AI? Just trying to understand how the business model will evolve.

R Srikrishna:
So the old platforms like Tenzai is very kind of managed services. The construct hasn't changed. I think
incrementally there is generic benefits into those kind of deals and contracts. On the newest, which is
RapidX, I think it's evolutionary. We are going to experiment with different models. We're still in early
phases. Remember we only brought it to beta at Q4 last year. So, it's early stages. Clearly our attempt is
to see what's the best mechanism that will bring us value for the platform beyond the human effort.

Gaurav Rateria:
All right, thank you.

Moderator:
That brings our Q&A session to a close. I will now hand back to Mr. Srikrishna for closing remarks.

R Srikrishna:
Thank you. Thanks, Dinesh. We actually, like I said in the beginning, in the light of everything that is
happening, we had a surprisingly normal quarter. We had actually a number of wins that make us feel
good. We have uncertainties around two clients. I think we now know what the bad is, and that's in the
books. There's potential significant upsides even with those clients going forward. And otherwise we are
in play for a number of very large deals that can change trajectory of growth of a company quite a bit.
Even without all of those happening, we will still have a solid Q2. We'd have had a great Q2, but we'll
have a solid Q2 and a great Q3.
So with that, I look forward to speaking to you again, and like I said in the beginning, I will also provide
you an update on our strategic initiatives every quarter. Look forward to the next quarter and look
forward to meeting some you offline as well. Thank you.

Moderator:
This concludes our conference call. Thank you all for attending.

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