Ladies and gentlemen, greetings and welcome to Enforcers Limited Q4 F526 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Mahindra. Thank you and over to Mr. Mahindra.

Thanks everyone. Welcome to this earnings call to discuss Interface Q4-FI 26 financial results. Joining us on this call is CEO and MD Mr. Farrell Tariq, CEO of Mr. Jason Rajka, along with other members of the leadership team. We will start the call with some remarks on the performance of the company, subsequent to which we will open up the call for questions. Please note that anything we say that refers to our future outlook is a forward-looking statement and not sure that in conjunction with the risk that the company faces. A complete statement and explanation of these risks is available in our filing with the SEC, which can be found on www.sec.gov. I'd now like to pass on the call to Salim.

Thanks, Sandeep. Good afternoon, good evening, good morning to everyone. Thank you for joining in. We delivered a strong performance in the financial year of 2026, we had a growth of 3.1% for the full year in constant currency terms. Our Q4 revenue growth was 4.1% year on year in constant currency terms. We had strong growth in financial services, in the communications industry, in manufacturing industry and for the Europe geography for the full year. Large deals were strong for the full year. We had $14.9 billion of large deals. This is a growth of 24% over the prior year. And for Q4, we were at $3.2 billion, a strong showing for the quarter. We shared our AI strategy during our AI Investor Day a few weeks ago. We see a large addressable market for AI services across six areas, AI strategy and engineering, data, process, legacy modernization, physical AI, and trust. With our Topaz fabric platform for AI, our COBOL platform for cloud, We have differentiated capabilities to serve our clients across the six areas of AI. Some examples of the work we are doing for a consumer products retail company, Ralfloren, we helped build a conversational and personalized AI tool that led to converting customer interest into a shopping experience. This resulted in an increase in their revenue by 12% and customer engagement by 50%. For a large transport company, Hertz, we helped with a legacy migration to bring 3 million lines of COBOL code to a modern microservices environment using AI foundation models. The cost was 60% lower. The timeline was 60% quicker than how they would have done it without AI. For a large energy company, BP, we deployed 50 AI agent initiatives across trading, supply chain, sustainability, and core operations to transform the software development, knowledge automation, legacy modernization, and digital decision support. This resulted in 95% payment accuracy, 50% faster contract validation, and 18% improvement in IT operations efficiency. We have strategic collaborations with emerging foundation model companies such as Anthropic and OpenAI, which help us support our clients' transformation for software development, legacy modernization, and agent building. We also have established strategic AI collaborations with Google Gemini, NVIDIA, Microsoft, AWS, Google Cloud, and Intel, among others. We've deployed over 30,000 deployer developers on GitHub Copilot. As we look ahead to financial year 2027, we see large opportunities in AI services, continued competitive intensity, and AI productivity impact. With a clear AI strategic roadmap and real-world toolkit of Topaz Fabric, we are well positioned to support our clients' transformation, technology, and operations objectives. The revenue growth guidance of financial year 27 is 1.5% to 3.5% year-on-year in constant currency terms. We expect acceleration in growth in financial services and the energy utilities resources services vertical from financial year 26 to 27. We expect H1 to be stronger than H2 consistent with our normal seasonality. Our operating margin guidance for financial year 27 is 20% to 22%. With that, let me hand it over to Jayesh for his update. Thank you, Sanit. Good morning, good evening, everyone. And thank you for joining the call today. Financially 26 performance demonstrates our ability to maintain financial discipline and operational excellence in a challenging and evolving business environment. Client spending is guarded with greater focus on cost optimization engagement as against growth-led transformation programs. We are seeing increasing momentum in AI-driven initiatives, particularly around productivity, automation, and platform-led modernization initiatives. Let me start with the key highlights for the year and the quarter. FY26 revenues crossed 20 billion and grew 3.1% in constant currency terms within the upgraded guidance ban given in January. This was after lower third-party cost, which was down by 1% as percentage of revenue and 0.7% reduction in onsite mix. Acquisitions contributed about 70 bits on full year growth. For FY26, communication, manufacturing, vertical, and Europe geography grew more than double the company average, led by ramp-up of the large dealings. Additionally, FS and EURS grew above the company average in concurrency terms. Volumes for the year were slattish. Growth was led by increase in realization thanks to Project Maximus. Adjusted operating margin was stable at 21%. Gains from currency and Maximus were reinvested in talent, AI investment, and sales from marketing. Q4 revenues grew by 4.1% year on year. Sequentially revenues declined 1.3% in constant currency due to seasonality and slower decision making in the month of March. Work in Q4 was broad based across major geographies. Communication, EURS and LS Vertical grew well above the company averaged on a year-on-year basis in constant currency terms. Q4 operating margins stood at 20.9%, down 0.3% sequentially, existed for the labor code impact in Q3. Onset mix further reduced to 22.8% from 23.1% in Q3. Utilization, excluding trainees, was 83% in Q4 and 84.4% in F526. Utilization, including Feeding trainees was at 81.1% for FY26, reflecting the investment made towards creating future capacity. Strong focus on collections aided by technology interventions helped us reduce DSO, including an unbuilt net of unearned to 78, which is the lowest in seven years. Reported EPS in IR terms grew 28.8%, YOY in Q4, and 11% in FY26. ETS adjusted for income tax orders and the labor court view double digits for the year at 13.9% in Q4 and 12.1% for the full year in IANA term. Free cash flow adjusted for the labor court and income tax refund stood at 3.5 billion for FY and 882 million for Q4. Adjusted free cash as a percentage of net profit continued to be well above 100% at 106 for FY26 and 111 for Q4. We had a strong large deal win in financial year with a PCV of $15 billion with 55% net Large deal pipeline continues to remain strong. Our $15 million plus clients increased by 3 and $100 million plus clients also increased by 3. $400 million by 2 in financial year last year. Headcount at the end of the year was over $328,000. Voluntary attrition reduced by 1.5% to 12.6% for the year, reflecting continuous jobs and interventions toward talent retention. We onboarded more than 20,000 freshers in FY26 and expect to hire a similar number in FY27. We will continue to calibrate the overall requirement depending on growth expectations and attrition trends. Operating margins for Q4 declined by 0.3% to 20.9% sequentially. Major components of the changes are as below. Headwinds of 50 basis points, impact from past acquisition on account of additional amortization of intangibles. 30 basis points for normalization of last quarter's one-off gain. 20 basis points for compensation-related costs offset by lower variable pay. This is partially offset by tailwinds of 40 basis points for currency. And 30 basis points for maximum comprising of value-based selling, lean, and automation in critical portfolios. Q4 yield on cash and investments balance was at 6.2% and 6.7% for the year. ROE stood at 31.6%. Consolidated cash and investments were at $4.5 billion after returning over $4 billion to shareholders in F526, reflecting a strong cash investment. We signed 19 large deals during the quarter with a TCB of $3.2 billion. This includes five each in financial services and manufacturing, four in detail, two each in Lifelines and Communication, and one in EURS. Region-wise, we signed 11 deals in Europe, five in America, and three in the rest of the world. In FY26, we signed 96 large deals with PPS of 15 billion, 55% net deal. This includes three mega deals for the year. Tax rates for the quarter is lower due to reversal of prior year tax provisions as a result of favorable tax orders. we expect effective tax rates for the financial year 27 to be in the range of 29 to 30 percent. In line with the capital allocation policy, the Board has proposed a final dividend of repeat 25 per share, which will result in a total dividend of 48 per share, an increase of 11.6 percent over last year, once the final dividend is approved by the shareholder. Coming to vertical, financial services for FI26 grew above company average at 4.4 percent, led by ramparts of large deal wins and continued momentum in AI-led transformation, legacy modernization, and vendor consolidation. Overall market sentiment remains positive, resulting in continued consumer spending across US banking, capital markets, and Europe. TY26 budgets are expected to grow in US. We signed a large BCC deal for a regional bank in the US, an industry first, and a large AI-force BCC deal. We are strategic AI partner for 18 out of the top 20 clients in this vertical, significant large deal closures and a new account opening in FY26, along with a strong large deal pipeline, will drive growth acceleration in FY26. Clients in manufacturing remain cautious amid software demand, particularly in automotive and parts of Europe. There is continued uncertainty on account of tariffs and ongoing Middle East conflict, which is resulting into delayed decision-making in pockets. Discretionary spending remains constrained, while clients prioritizing cost optimization and operational resilience. Large deal pipeline comprises of infra outsourcing, AMS, X4ANA rollouts, etc. Near-term and FI27 growth will be impacted due to low revenue from one large client. Across EURS segments, demand environment remains constructive, supported by a strong large deal pipeline. Clients continue to prioritize cost reduction and operational efficiency, which is a driving vendor consolidation. In energy, we see increased outsourcing, leading to healthy deal momentum. Utilities demand is structurally higher driven by grid constraints, renewable integrations and acceleration electricity needs for a data center. 80% of the larger GTV of FY26 was net new which will help growth and acceleration in FY26. In retail segments, clients are operating in continued uncertainty from supply chain disruptions, geopolitical conflicts, and shifting trade policy. Consumer demand remains rooted across the sector and budgets are tightly controlled with discretionary expense under pressure. Clients expect savings from AI-led productivity to do more with a similar budget. We will see higher demand for AI-assisted legacy modernization. SoPAS, FEDRIC, and AI-next platforms are helping clients in ideation from concept to deployable stage with the right card rails for privacy, ethics, and control. In communication sectors, growth for FY26 was led by large deal ramparts. Overall environment remains cautious amid macro uncertainty and margin pressures for clients. Budgets are flat to negative, which is impacting discretionary expense. Non-discretionary expense are selective and increasingly AI-less. There is a shift from generating to agency AI with clients consolidating ID and VPN cuts. We see a strong uptick in AI deals in areas like IT operations, software replacement, and mainframe migration. As we enter FY2010, we continue to see a measured and selective approach to enterprise budgets amid macro and geopolitical uncertainties, higher interest rates, rapid technology shifts, and high competitive intensity. We expect FY2010 growth to be 1.5% to 3.5% in concept of currency time. The FY27 guidance includes contribution from status which we closed earlier this week but excludes worse in JV and optimum healthcare acquisitions that are yet to be closed. Reduction of 0.75 to 1% due to a lower revenue from one of our large European manufacturing clients. This was due to reduced client spend on account of challenging metro environments along with our conscious decision to not pursue a certain deal that was not aligned to our return expectations. Further reduction in onset mixed by 0.75 to 1%. We expect third-party costs for FY27 to remain at similar levels as FY26. Our operating margins guidance for the year is 20 to 22%. This assumes headwinds from wage hikes, productivity pass rules, and AI investments offset by initiatives under project maximum.

The impact of optimum healthcare strategy worsens on operating margins will be approximately 0.7 on a full-year annualized basis post-closure. with that we can open up for the question thank you very much we now begin with the question and answer session anyone who wishes to ask a question may press star and one on the attached on telephone if you wish to remove yourself from the question to you may press star and two participants are requested to use handsets while asking a question ladies and gentlemen we will wait for a moment while the question is assembled. Participants, you may press star and one to ask a question. First question is from man of Yogesh Agarwal from HSBC Securities. Please go ahead.

Yeah, hi. Just couple of questions. Firstly, can you talk about the push-pulls for the guidance like at the lower end and the upper end? What are you assuming? And secondly, you guys had a very successful project, Maximus, the quality of business the revenues has also improved but the entire INR depreciation which is very significant has not impacted the margin outlook so i was just curious which are the areas where all the INR depreciation has been invested and if you can talk a little bit about that thank you at the lower end of the guidance we have assumed you know higher deterioration in the environment and at the upper end, we have assumed improved the environment, like similar to what we've done in the last year as well. In terms of margin work, I did give you, you know, broad margin work, but largely we have invested, you know, all the benefit that we got from Rupee as well as from Maximus back into the business, whether it is sales and marketing costs, which has gone up by 40 basis points and a full year basis, the AI talent and, you know, the AI partnership, that we have. So I think all of that has been absorbed in the margin in the financial year. And just a quick follow-up, you mentioned productivity passed through impacted margins. I was just wondering why should that be the case if there was productivity improvement? The market is competitive, right? As I said, the competitive intensity in the market has gone up and the productivity will get passed back to the client last week thank you thank you next question is from the man of ankur rudha from jp morgan please go ahead oh thank you um i noticed you've chosen to guide in a 200 basis point band versus a slightly wider band in the last couple of years is your visibility better this year versus the last few years and furthermore if you can you know there's a bit better a bit more into the guidance uh you know as a follow-up to the previous question dividing for a 2.25 percent

organic at the midpoint approximately which appears to be a bit of a slowdown versus the two and a half percent or 2.4 percent organic in fiscal 26. can you really talk about what the puts it take for the outlook um and you know if you can especially elaborate on if uh the slowdown is because of a demand environment b structuring ai vacation or see the impact from that one large account which is ramping down this year.

Yavish, if you look at the guidance, last year we gave a three-point guidance because the whole environment changed, you know, pretty much very close to the time when we were giving guidance, right? And we had no, we had very little clarity in terms of how that environment changed because on the back of tariff, tariff changes is going to impact the client behavior, etc. Where we stand today, I think there's a better clarity in terms of, you know, what's happened. The environment has been like this for last few quarters and we know how clients are behaving at this point, at least at this point in time. Of course, if things change, if the client behavior will change, that's given always. But at this point in time, from a comparative perspective, we have a better clarity and better handle over to the last year. Ankur, on the construction of the guidance, we're seeing positive where the changes are. Jayesh mentioned many of those points, I'll elaborate. We're seeing the growth on AI services. We're seeing very good traction on that. But we're seeing we've started a program where we are working with large companies with a smaller footprint that Infosys has. We're expanding that quite nicely. Then we saw the last deal, the net new was 55%, so that will contribute for this financial year in a significant way. And then, on the other hand, there is the productivity benefits that are coming through, which clients are looking for with AI on the existing portfolios. Then Jay shared a couple of situations with manufacturing, Europe, with on-site mix, some technical factors. So those, if I sort of add and subtract, is where we came on that guidance. The environment, I find, is good. Our Lajdi's pipeline is good. The way we had done it on that AI investor day, we had sort of said, look, there's a growth side with what will be the AI. We have a couple of other growth drivers. and then there's a compression side and that's the balance that we have seen in the past year with 3.1% and if you adjust for the one-timers the one-time from the prior year we had a growth rate which was more than the compression we were seeing and this coming year the guidance that we have started with also see that. And then we'll see, as Jay said, on the environment, how it changes, improving or not improving, and then see how the year goes after that. Thank you for the graduation, Saran. If I could, you know, just a quick follow-up. What would need to happen for you to see an acceleration at the midpoint on an organic basis? Thank you. These are things which are always more difficult to estimate, as you know well, Ankur, on However, the view emerging is that the situation in the Middle East may find some sort of a good out resolution, then the underlying economic strengths are pretty good in the markets where we are large, so that could give, you know, sort of rise to a more stable macro environment. And our AI traction and partnerships are good. So those things, you know, the first and the second accelerate, then we will see some good outcomes. But it's more of going in, you know, we see the environment today, it's not, we've not seen some big change to give us a view that, you know, we have to do a three-point range and so on at this stage. And overall, we see growth, which is more than compression. Appreciate it.

Thank you. Next question is from the line of Brian Bergen from TD Coven. Please go ahead.

I wanted to ask on the AI productivity that you're seeing here. So with the AI model advances happening as fast as they are, has the amount of productivity during compression that you're seeing changed in the current contracts relative to what you may have been seeing, say, one or two quarters ago? and can you can mention maybe the mix of the business that is directly exposed to the productivity passers versus maybe the mix of the business that is more insulated on the first one we are not with the model and the technology is moving with great innovation we have not seen in one or two quarters the change

that you referenced so what we are seeing is a competitive intensity is pretty high so every now and then we see you know a competitor doing something which looks outside the range of what we think the models can do today so that that sort of thing we do see but not that there's just a second in this last two quality meaning over the last two years of course that have been changing In the terms of EXPOSE, I think we have not, like, shared that data, but I think we've shared very clearly what our service line data is, and so you can make some estimates with that, I think.

Okay. And then my thoughts on kind of how you're thinking about the overall business and headcount. You know, hiring extensions for fiscal 27, I think I heard you say, you know, roughly targeting the fresher part of around 20,000 again. But do you envision a scenario where I guess the total headcount could ultimately be down in total when the year is over? And also, do you now talk about the subcontractor intensity that you're anticipating in the year ahead?

On the overall headcount first, as you pointed out, we will recruit 20,000 college graduates. That's our plan today. We have a model which does some of it at one particular time and the rest of it throughout the year. So we have like a variability built in if we see some changes. But what we see today, we think $20,000 looks like a good place to start. We still have, at least now by look out for this quarter and next quarter, very good demand for people which are coming at higher levels, lateral recruitment. So I think that will continue. I don't see that our headcount is going to be, like, we don't have a plan that the headcount will be less at the end of the year. Now, we'll see how the demand of our environment plays out, but it's not going in sort of a view that we have. Of course, we have, you know, we basically look at Q1, Q2, and the rest we build out on the models we have. Yeah, and then the subcom brand, if you look at the last few years, you know, subcom, as a percentage of revenue has come down. Obviously it's also a factor of the growth. So typically, we use subcons to meet the demand which comes in immediately, we don't have the requirements, skillset, et cetera, and then we backfill that to the employees, and that's a cycle that goes on. So we don't really expect subcons to significantly change from those numbers. Over a medium-term period, we expect uh to maybe go towards uh the lower end i mean to slightly go down from the current level but at this point in time not significant okay that's above thank you very much thank you next question is from land of part of rotharia from morgan stanley please go ahead hi thank you for taking my question my first question is on the construct of growth when i look at that, there are broadly three factors that comes to my mind. The first is the macro. Compared to last year, it appears that the headwinds related to tariff, et cetera, are not there. So there is slight improvement, which is reflected in 40% of your portfolio that you talked about. The second factor is AI services, which probably has become larger than the last year and growing faster, which again is a tailwind. And the last factor could be the deflationary impact on existing business on account of productivity savings.

So the fundamental question is that the first two tailwinds look better than last year and the growth rates in organic terms does not look better at the midpoint of guide.

Is it that the deflationary impact assumed in your guidance at the midpoint is slightly higher than what you have seen in the last year? Hi, Gaurav. This is Khalil. I think what you described is the way it starts off, which is you see very strong activity on AI services. On the macro, as the year progressed last year, the situation of the tariff got better and better understood, as you know. Then when the war started, that again had a little bit of a constraining effect on the macro there's a general view that there's coming to a resolution but it does not happen so while some of the economic indicators are forecasted in a better way it's not yet into the system in that sense so we'll see where it actually comes in then if you look at the couple of things that jay shared on the specific on the manufacturing Europe on the specific on the on-site mix when you put all that together we see actually something which looks stronger in that sense to what we saw last year now the compression is definitely there but it's not I don't know if I have a sense that it's more than last year we have definitely seen the compression, but we're also seeing the growth, and that's how we're sort of dissecting it, if you will, and Jayesh, Madhaz, and that. So, Gaurav, maybe a couple of points in addition to what Sharan said. If you look at last year, we started with 0 to 3% and then as the visibility improved, every quarter we either tightened the band or improved the guide from where we are. The idea of guidance is to reduce our symmetry and provide our viewers to what we see today. And this is what we see today. We do have a client in manufacturing in Europe where we have stayed away from a deal where it did not meet our return estimations. There's some ramp downs on the client happening because the client is going to a challenging macro environment. So that is baked in. We have also baked in, you know, the onsite mix that will impact in the guidance. The exit trajectory of onsite mix is already, you know, pretty much 40 to 50 basis points from the future year perspective. So that is baked in in the guidance already. And the resultant is 1.5% to 3.5% guidance that we have announced. Of course, if the visibility improves as we go through the year, we will re-do that.

Thank you for the detailed answer. The second question is on the new AI services.

Would it be fair to say they come at relatively higher revenue productivity than the core business and also better gross margins or not? Lafi, Jayesh, any color on when would the wage hike cycle kick in during the current crash here? So, Gaurav, generally the AI projects come at a better pricing and therefore, you know, it reflects in a better margin. Of course, it also has a higher cost compared to the regular projects because the talent is a premium talent at this moment, right? So it's always a factor of, you know, how much ahead of the curve you are in terms of benchmark, and that's what will define the premium that you'll get in the market, right? If you are at the benchmark level, you wouldn't get a premium. If you are ahead of the curve, you do get a premium. And at this point in time, if you look at the, you know, the numbers in terms of deeds that we are winning, we have won $15 billion deeds that kind of talks about our positioning in the market, you did see on the AI day everything that we presented in terms of our capabilities and what clients are saying in terms of our AI capabilities. So I think that kind of gives us the comfort and confidence that we are in the right direction and it's also reflected in the pricing and the margins on the AI day. In terms of wage increases, we haven't really decided the timing at this time in time. we do take multiple factors when we decide that in terms of you know the level of attrition that we have you know when did we do the last wage increases what the market scenario what's the inflation at the time we will take all of those decision into consideration and decide thank you and all the very best thank you next question is from the land of summit Chen from CLSA India please go ahead yeah thanks for the opportunity so solid firstly wanted to check in the last two months with the latest launch of anthropic models have you seen increased productivity demand from the client I mean you mentioned in the press conference and nothing material has changed in the last three months can you just specify what kind of client conversations are you happening around productivity so there the the sense I have is the need for productivity is similar there is some level of competitive intensity which is higher which then leads to more sort of demand there are some cases where where it's way outside the bound where, you know, there is not a lot of engagement, then that is something which we don't see a way of getting to. So we are not, you know, going down those paths. But those are very infrequency. If you look at the vast majority, we see not just like something is complete, big changes have come literally in the last two months or so at this stage.

Now things are moving fast productivity over time which is you know over multiple quarters year that has changed but it's not that something suddenly is like a step change in the last two months that we've seen and can you also help throw some light in the new deals what you have signed I mean are the productivity levels with usage of AI tools similar to what you are in a way passing on an existing business can you give some you know because the order book looks pretty strong on a yoy basis for the full year but that is not translating into your improved organic growth in f27 so is it like

the base business is seeing a much higher deflation than you know what each one of us were expecting and with the improvement in ai models can it actually further accelerate in the coming coming quarters so can you show uh throw some light as to how you are seeing the market So there, I mean, we are not sharing the specifics on what we're seeing in the portfolio in the growth compression side, as opposed to what we've shared, which is our overall guidance with some of the points that Jayesh mentioned, the on-site mix, the manufacturing, etc. So I think we see with that solid growth outlook where we're keeping pace, making sure that what we're seeing in the AI services growth, some of the other areas of growth that we see is growth which then manages the compression that we see on some of the other parts of our business. So we don't have a way of sharing, you know, that this is the compression, this is the gross growth, and then this is the net sort of a growth issue.

No, got it. I think that's always a difficult thing to quantify. But also, if you can just flag in terms of any quantification you can give the impact of the European manufacturing client sort of ramp down or maybe some competition kicking in there. And I guess, Rajesh, you also mentioned that the shift to more offshore will have a 40 to 50 groups impact in S527. And I guess there were some, you know, articles around Vanguard and sourcing. So if you can quantify these three things, how much is the impact on your guidance in this year?

Yeah, so, you know, if you look at what I said earlier, you know, 1% impact, so 75-1% impact will come from the European client, which is a combination of a deal which does not meet our, you know, returns expectation and the rundowns in the client through the year as the macro environment is challenging in the sector. So 70 basis points is a reduction in onset mix we are expecting. 40 to 50 pages points is already visible in the exit trajectory and we do as we see forward we still believe there'll be you know even further improvement on the on-site mix so that will also impact the revenue growth so I got it that's very helpful and all the best thank you thank you thank you next question is from line of Jonathan Lee from Guggenheim partners please go ahead great Thanks for taking that question.

Percentage of net new deals came in at the lowest level we've seen in recent years. Can you help unpack whether that's a function or capability set, AI pressure, potentially impacting the demand environment, or any other factor there, and can you walk us through your expectations for net new deals for the year, given what you're seeing today in the Jonathan, buddy, can you repeat the question? We're seeing percentage of net new deals come in at the lowest level we've seen in recent years. So can you help us unpack whether that's a function of capability set or AI pressure impacting the demand environment or any other factor there? And can you walk us through what you expect for net new deals for the year given what you're seeing in your pipeline today?

So Jonathan, if you look at the combination of net new and the renewal is what percentage of deals are coming in for renewal and what percentage of deals are in the pipeline from net perspective. So the full year, if you look at, we did sign $15 billion of these, 96 of them, pretty much 55% net new in that. So I think by any stretch of imagination, that's a strong performance. It's a 35%, almost 25% growth on a year on May.

Yeah, and as a follow-up, can you help us understand what transpired over the course of the quarter, and how that may have tracked relative to your internal expectations? I'm hoping to get a better understanding of when you may have started to see to see some of the outside of deflationary impact or some of the downtick in revenue realization or any other dynamics at play there?

I mean, we don't really give a visibility in terms of what were we setting as goals of looking at plants in terms of large deals and performance against that. I think, in our view, $3.2 billion is a strong performance. Yeah, we do see in some buckets some slow decision making in March but I I don't know if it has got a significant impact on you know in the last week signups I I wouldn't call that at this time appreciate the cover thank you thank you next question is from the line of a bowl singing from warm up please go ahead yeah hi thanks for taking my question the two questions are from my side the first question is basically on the AI deflation or the compression part that we've been discussing a lot.

So just wanted to get some color as to where do you think we are in that revenue deflation So let's say if I were to compare it to the last digital cycle, we had revenue compression which kind of increased and then we reached a trough. And from there, basically, that started coming down. And along with, we had incremental revenue coming from the digital business. I would assume the cycle should pretty much follow the same order. So while our GNI revenue, and which is for the other companies also, is reporting very strong growth, the revenue compression continues to be quite substantial at this point of time. So do you think we are already at the trough of that revenue recession cycle? If not, I mean, I know it's difficult to quantify the timeline. So basically, are we still aware there is more depression that you think of that might come in? Or do you think we are basically done with the versus behind? And the deflation will still continue, but it might be not as much as, let's say, going forward as it was before. And then I have a follow-up for Jayesh.

So, hi, this is Alil. On that, what we are seeing is there are different sort of dimensions to the compression, meaning we are now working with clients where some of the productivity discussions were baked into the deals over the past year or so and then you have a multiple year outlook so all of that has not happened on the first year it goes through it so the actual compression will be dependent on the mix first year, second year and so on We have not got a sense of where we are on that path, but we have a sense of what the foundation models and other tools are able to support and use that as a basis for what we are doing with forward deals, like three-year, five-year deals and so on. But on that sort of a scenario, we don't have a view we can share on like where that path is. But we are definitely very clear on where, you know, like when you're working with the foundation model and tools, what is possible, where is it effective, different models or different tools are more relevant for different parts of the ai work that we're doing with clients that that we are very i would say close to it got it got it if i may just extend a bit on that so let's say uh the deals that we are signing at this point of time you mentioned many of them have that productivity benefit already baked in or let's say built into the original deal but as

the cycle evolves are we also seeing let's say deals which we have signed just maybe six months ago or 12 months ago and there the client has come back and asked for incremental productivity benefits to be passed and talking about the recent deals not the early days i'm sure the early days are seeing that kind of a response sometimes but in these recent deals also are we seeing that kind of a movement uh in our conversations i don't think uh we have seen you know scenarios where what we signed two months back the client has come back and asked us uh you a different productivity to be baked in again.

What Shaleen was talking about, when a deal comes up for a bid or when you're waiting for a new deal?

Right. Got it, got it. That's one last question for you, Jayesh. In terms of the margins, I think this quarter had a very good tailwind from INR depreciation. Now, we know that for a long, the industry has matured to a state where rupee depreciation doesn't need too much of margin expansion over the medium to long term. But we have generally seen a temporary quarterly bump up in margins because of annual depreciation. Has that benefit also kind of stopped trickling in because not just for us, but for most of the players in the industry, we're not seeing any kind of a margin expansion. Is it that in this quarter specifically? Is it that those benefits are being invested somewhere else? or is it that those benefits have stopped accruing at all and those are being passed to the client immediately?

The two points that, because generally, I mean, you do have repeat benefits that sometimes gets offset, or most of the time gets offset by cross-currency headwinds, right? Because when U.S. dollar appreciates, it appreciates against most currencies and that kind of offsets each other. And your portfolio of non-U.S. as it goes, that offset becomes larger and larger, you know, across us and across the industry, also you have seen that. I mean, there were times when the U.S. dollar used to be 70-plus percentage, or, you know, U.S. used to be 70-75-plus percentage, that obviously has gone down significantly, and therefore the headwinds from the other currencies come in. If you look at this quarter specifically for us, as I called out in the margin walk, there There was a, you know, close to 50 basis points of headwind that we got because of, you know, amortization of one of the acquisitions related intangibles. Last quarter, we had a 30 basis points gain. So, in a way, these two went into two different directions for us in terms of margin impact. Both became a headwind. And then 20 basis points on account of, you know, employee-related costs. so all of those were headwinds that were offset by 40 basis points from currency and 30 days from maximum okay thank you so much for taking my questions and i wish you all the best thank you thank you next question is from the line of abhishek patak from please go ahead yeah hi i'm audible yes sir yeah yeah hi hi so i had a question around um you know, the deals that we left on the table. We saw similar comments from one of your peers as well. So just curious, sort of, you know, what is happening over here? Are we being disrupted by, let's say, leaner, sort of, you know, more AI-native sort of companies who are pricing the deals very low by the delivery model changing? Or is this a race to the bottom from traditional vendors who are just essentially, you know, sort of creating a pricing, creating a national pricing? I'm very curious as to, you know, what's happening here. And over the next two, two, three years period, do you think, you know, the industry needs to find, you know, newer models to sort of, you know, try the deals and, you know, how much is sort of possible to kind of change over here in the short term? So there, it's not that this is something widely prevalent. We do see sometimes a particular sort of competitor doing pricing, which seems sort of unusual. But this is something that's happened over the course of the years for different reasons. Just now, it may be linked in a client's mind to AI productivity. In other times, it's got other things. So I don't see that it's something which is sort of across everything. At the end, we had 96 deals with close to 15 billion in large deals for last year. So it's a very sort of broad-based, robust outcome, plus the pipeline is pretty good. but the anecdotal things where some of the productivity thing looks out of the range that we see with what's possible with what we have understood you know with the sort of foundational so it's more that sort of common not at least we don't see that as being a sort of trend of some song to understand thank you so much on the question thank you next question is a from man of Keith Beckman from BMO Capital please go ahead thank you very much I have two questions the first question is

related to pricing and I want to understand the context of how I think competitiveness has changed and you started the answer on the last question and really a bit more competitive today than it has been over the last couple of years. But the fear of the question is my understanding when some of your competitors are getting more aggressive on pricing, they're introducing cost curves associated with the deployment of AI, but may have more uncertainty surrounding those cost curves because this is new technology and I think everybody's trying to figure out what it can and can't do at the current level. um so does that introduce incremental risk and how you're philosophically thinking about pricing uh if you could talk a little bit about pricing dynamics with the introduction of ai and i do have a follow-up i'll start on on that uh pricing sort of point uh the way we're seeing it is the

the point you made about competitive intensity we do see there is increased intensity if you look at last financial year, we had a growth. Some other players had negative revenue. So one can sort of imagine some of that sort of a scenario. In pricing, actually, Jayesh will talk a little bit about it. I think overall, a realization is better in the year than we have seen before. So So maybe, you know, the execution is better and the portfolio, at least we feel, is less risky in that sense. So I don't think we have what, if I understood well what you were describing. If I can just add to what Salim was saying, if you look at the elevated level, you know, despite the software volume through the year, most of our growth came from the realization. That reflects in what we've been able to get on the back of AI, that reflects in the value that we are creating for our clients, and to some extent, that also reflects the contribution from Project Maximus to the, you know, lean automation, value-based selling, and all of those tracks, right? That is the one. If you look at, despite the competitiveness in the market, despite all of that, we've been able to maintain our margins for the year. We invested back in the business 50 basis points or 40 basis points and sales and marketing, the AI talent that we are building, the AI capabilities that we are building, all other AI related investments. All of that has been absorbed in the margins while keeping margin conscious.

Okay, okay. Let me ask my second follow-up question and it also speaks to or question the growth algorithm. And I'm trying to understand how the growth algorithm may change from a volume perspective given the AI efficiency gains on the supply side. And the way I think about it, and I've had this, we've had this conversation with one of your competitors, if you're trying to go at 3%, in the past years, you might have to grow volumes by five or 6% to get to 3% growth. And one of your competitors has suggested that, you know that volume variance may need to double because the efficiency gains will get to the same revenue growth trajectory and i just wanted to see if you could think about you know over the how is how is this algorithm on a volume basis different today because of those efficiency gains as you look out over the next 12 months for what the what it's been over the last couple years the reality is we do see as sarah was saying earlier we do see some deflation from our existing services, right?

And largely part of that is getting offset by the new services, the new AI-driven services. Overall, at this point in time, the volume for the last year has remained flattish. And as we go forward, we continue to see volumes remain flatter or marginally positive as what we baked in in the guidance at this point. And this is reflected in the lower end. the upper end, you know, as I said earlier, we have expected, you know, better macro environment, which would reflect reflecting better volumes.

Okay. All right. Very thanks. Good luck.

Thank you. Thank you. Next question is from the line of Apoorva Prasad from Franklin Templeton. Please go ahead.

Hey, hi. Any comments on the direction of the on-site mix? I'm trying to understand if the AI compression or, you know, just AI embedded in services and contract structures, is that impacting the delivery mix? You know, Akhru, I think it's a multiple factors, a little bit of the environment, a little bit of, you know, the visa situations in some of the countries, a little bit of our own initiative to deliver, you know, deliver more from offshore. So I think it's a combination of all of that. So there's your feedback correct for the third party you expect that to be similar? Sorry, just to add, the discretion is kind of also come down, which generally needs higher on-site. OK, and for FY27, the on-site exit should be similar, and third party costs, I think, you said will be similar next year, would you? Third party costs, you know, I did say that earlier, we expect it to be in the same, similar range. FY27 exit is difficult to predict. At this point in time, you know, as I say, the FY26 exit itself gives us approximately 40, 50 basis points of lower onsite mix, and, you know, we think this trend will continue to some extent. It's very difficult to, you know, predict what will be FY27 exit. Sure, thank you. Thank you.

Thank you very much. Ladies and gentlemen, we'll take that as the last question. I'll now have the conference over to the management for closing comments.

Thank you. First, thanks everyone for joining. I just want to share a quick summary. We had a strong FY26, 3.1% growth, 21% margin, very good large deals, close to $15 billion. We have a growth guidance for the coming year. We have a mix of growth drivers and compression, overall growth guidance, and adjusting for some of the one-off technical factors, larger growth for like basis. The AI services approach and strategy, I think we've laid out is resonating with our clients very well. We see all of the six areas in our pipeline, very good partnerships. with the AI foundation model companies and other tool companies. With all of that, we look ahead to a strong, successful year in this coming year and look forward to seeing all of you, catching up with all of you in the next quarterly call. Thank you. Take care.

Thank you very much, members of management. Ladies and gentlemen, on behalf of InfoSys Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.