Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LTIMindtree Ltd (BOM:540005, Financial) achieved a constant currency revenue growth of 5% in FY '25, compared to 4.2% in FY '24.
- The company recorded a Q4 order inflow of USD1.6 billion, marking the second consecutive quarter with over USD1.5 billion in orders.
- LTIMindtree Ltd (BOM:540005) was included in the S&P Global sustainability yearbook 2025, reflecting its commitment to sustainability.
- The company has partnered with the Indian Institute of Management Mumbai to introduce a postgraduate program for executives in AI-led experience design.
- LTIMindtree Ltd (BOM:540005) received the India Green Award 2025 for demonstrating best practices and achievements in sustainability reporting.
Negative Points
- Operating margins for FY '25 stood at 14.5%, a decline of 120 basis points year-over-year.
- Revenue growth momentum slowed in the second half of FY '25 due to macro uncertainties.
- The health, life sciences, and public services vertical declined by 3% year over year, primarily due to the healthcare business.
- Europe and the rest of the world experienced revenue declines of 1.2% and 1.7% respectively in FY '25.
- The company's EBIT margin for FY '25 was 14.5%, down from 15.7% in FY '24, indicating pressure on profitability.
Q & A Highlights
Q: From an organizational perspective, are the changes you highlighted already in place, especially regarding people, or will they take time to implement? What are the quick wins and longer-term areas in sales transformation and margin targeting?
A: The organizational structure is final, and we're strengthening and improvising existing areas. The Fit for Future program initiatives are already underway, now brought under one umbrella for focus and governance. Both sales transformation and margin initiatives should start yielding results soon, focusing on improving our sales playbook and effectiveness. - Venu Lambu, Chief Executive Officer (Designate)
Q: What is the outlook for the top two clients, particularly in high-tech and banking? Are there risks or opportunities?
A: The productivity benefits for the high-tech client have been factored into Q3 and Q4, and we continue to develop new capabilities with them. For the banking client, we see increased opportunities and no immediate risks. - Venu Lambu, Chief Executive Officer (Designate)
Q: Has the macro uncertainty impacted demand in March and April?
A: The uncertainties from Q4 persist into Q1. Clients are focused on cost-saving opportunities, vendor consolidation, and tech modernization as they navigate these uncertainties. - Venu Lambu, Chief Executive Officer (Designate)
Q: How has the headcount reduction this quarter affected growth expectations?
A: The headcount reduction follows aggressive hiring in Q2 and Q3. As AI-led productivity increases, headcount growth may not be linear with revenue growth. - Nachiket Deshpande, Chief Operating Officer
Q: Should we expect usual seasonality in FY '26, or will macro uncertainties alter the pattern?
A: Seasonality should remain similar to last year, but our ability to respond to new client demands and the duration of macro uncertainties are variables to watch. - Venu Lambu, Chief Executive Officer (Designate)
Q: Are there any client-specific issues in insurance or travel sectors?
A: In travel, there were client-specific impacts in FY '25, but no new issues are expected in the near future. Demand outlook will be clearer in a couple of quarters. - Venu Lambu, Chief Executive Officer (Designate)
Q: How do you plan to address both growth and margin challenges concurrently?
A: We aim for profitable growth by improving both revenue and margins. Our strategy involves enhancing agility and operational efficiency through AI and cost optimization. - Venu Lambu, Chief Executive Officer (Designate)
Q: What caused the revenue decline in Q4, and what gives confidence for growth in Q1?
A: The decline was due to delayed ramp-ups and deal closures, influenced by macro factors. Confidence in Q1 growth comes from expected deal closures and ongoing strategic engagements. - Debashis Chatterjee, Chief Executive Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
