HCL Technologies Q1 2026 Conference Call #conferencecall #concall #earningscall – https://www.youtube.com/watch?v=rqgABAhec7s

Here are the key highlights from the ACL Tech Q1 FY26 earnings conference call:

1. Revenue Performance:

• Revenue increased by 3.7% YoY in constant currency, despite an 8% sequential decline.
• Q1 is traditionally a soft quarter; growth was driven by verticals like technology & services, telecom & media, retail & CPG, and financial services.
• Geographically, growth was led by Rest of the World (15%), Europe (9.6%), USA (5%), and India (1.3%).

1. Segmental Performance:

• Services business grew 4.5% YoY but declined 0.1% sequentially.
• IT & Business Services grew 3% YoY; Engineering & R&D services grew 11.8% YoY.
• HCL Software declined 3% YoY, but ARR stood at $1.06 billion (+1.3% YoY).

1. Margins:

• Operating margin was 16.3%, lower than planned, impacted by utilization drops, client bankruptcy, and strategic AI investments.
• Margin guidance for FY26 revised to 17-18%, with expectations to recover to 19-20% over the next few quarters.
• Margin decline attributed to capacity build-up, restructuring costs, and one-off client issues.

1. Client & Deal Wins:

• Added 6 clients in the $50 million category and 11 in the $20 million category YoY.
• Net new bookings of $1.8 billion; large deals in financial services (not yet in TCV) expected to close in Q2.
• Strong pipeline, especially in digital, AI, and application modernization.

1. Strategic Focus & AI Initiatives:

• Accelerated investments in generative AI and platform development.
• Partnerships with OpenAI, UiPath, Google Cloud, Nvidia, and others.
• Recognized as a market leader in AI and data by multiple analyst reports.
• Launched full-stack AI portfolio (AI Force, AI Foundry, AI Labs, AI Engineering).
• Notable client projects include AI-driven live sports commentary, cargo optimization in aerospace, and real-time camera recommendations.

1. Market Recognition & Awards:

• Only service provider ranked as a customer’s choice in all six Gartner Voice of the Customer quadrants for IT services.
• Multiple awards and recognitions, including top honors at AWS GenAI Premier League 2025 and leadership positions in analyst reports.

1. Financials & Cash Flow:

• Total revenue of $3.545 billion; net income of $440 million.
• Operating cash flow of $2.57 billion; free cash flow of $2.42 billion.
• Balance sheet strengthened with gross cash of $3.46 billion and net cash of $3.19 billion.
• Last 12 months EPS at Rs. 62.57 (+3.4% YoY).

1. Future Outlook & Guidance:

• Revenue guidance revised upward to 3-5% growth in FY26.
• Margin guidance adjusted to 17-18%, with expectations to return to 19-20% over time.
• Plans for restructuring and investments in AI and go-to-market capabilities.
• Expectation of normalization of margins in FY27 as investments stabilize.

1. Management & Strategic Initiatives:

• Focus on building a balanced portfolio, expanding digital and engineering services.
• Emphasis on AI ecosystem development, partnerships, and client engagement.
• Talent strategy includes targeted hiring, upskilling, and aligning incentives with long-term growth.

1. Key Challenges & Risks:
   • Short-term margin pressures due to capacity build-up, restructuring, and client-specific issues.
   • Some verticals like auto, manufacturing, retail, and life sciences facing stress.
   • Delays in large deal closures due to procedural reasons, not demand deterioration.
2. Closing Remarks:
   • Confident in the company’s growth momentum and strategic investments.
   • Committed to improving margins and delivering long-term shareholder value.
   • Appreciation expressed to employees, partners, and investors for their support.

These highlights encapsulate the company’s current performance, strategic focus on AI, market positioning, and outlook for the upcoming quarters.

Q1 FY26 Highlights (June Quarter ended June 30, 2025)

• Net Profit fell ~9.7% YoY to ₹3,843 crore, dropping ~10.8% sequentially from Q4 FY25 ₹4,307 crore Business Standard+1Reddit+1Reuters+14Business Standard+14DQ+14
• Revenue grew 8% YoY to ₹30,349 crore ($3.545 billion), though constant-currency (CC) growth was 3.7% YoY and down ~0.8% QoQ NDTV Profit+6HCLTech+6DQ+6
• Operating Margin (EBIT) at ₹4,942 crore or 16.3% of revenue, impacted by utilization drops and increased GenAI/GTM investments NDTV Profit+4HCLTech+4Fortune India+4
• Deal Wins (TCV) amounted to ~$1.81 billion in Q1, down from prior quarter’s ~$1.96 billion DQ+13HCLTech+13NDTV Profit+13
• Board approved interim dividend of ₹12 per share, marking the 90th consecutive quarter of payouts, record date set at July 18, 2025 Fortune India+6Business Standard+6Moneycontrol+6
• Guidance (FY26) revised:
  • Revenue growth: 3–5% YoY in constant currency
  • EBIT margin guidance: narrowed to 17%–18%, down from earlier 18%–19% Reuters+9HCLTech+9DQ+9DQ+7Business Standard+7NDTV Profit+7
• Operational Metrics:
  • Headcount decreased slightly to ~223,151 (net reduction of 269), with attrition steady at 12.8% Business Standard+4Fortune India+4Business Standard+4
  • ROIC improved to ~38.1% overall and ~45.2% in the Services business; strong Cash flow metrics (OCF/NI ~129%, FCF/NI ~121%) HCLTech+2Moneycontrol+2Business Standard+2
• Strategic Deal:
  • Secured a 10‑year digital transformation pact with Dunedin City Council, New Zealand—expected to boost credibility in public sector business The Economic Times+1The Economic Times+1
• Semiconductor Push:
  • Government approved HCL Group’s joint venture with Foxconn for a ₹3,706 crore chip manufacturing plant near Jewar, Uttar Pradesh, scheduled to produce 20,000 wafers/month; production to begin by 2027

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