Financial Data and Key Metrics Changes - The IT services revenue for Q1 was $2,590 million, reflecting a 2% decline in constant currency terms, which is within the guidance range [7][20] - Operating margin for Q1 was 17.3%, an expansion of 80 basis points year on year [21] - Net income grew by 10.9% year on year, with earnings per share (EPS) at INR 3.2, a growth of 10.8% year on year [24][25] - Free cash flow as a percentage of net income was robust at 115% for the quarter [25] - The effective tax rate was 21.6% for Q1, down from 24.5% in Q1 2024 [26] Business Line Data and Key Metrics Changes - BFSI sector saw a decline of 3.8% sequentially and 3.5% year on year [23] - Healthcare grew by 0.5% sequentially and 3.5% year on year [23] - Consumer sector declined by 4% sequentially and 5% year on year [23] - Technology and communications grew by 0.4% sequentially but declined by 3% year on year [23] - Capco continued to perform well, growing by 6.1% year on year [24] Market Data and Key Metrics Changes - Americas market grew by 1.5% year on year in constant terms, with strong deal momentum [7] - Europe faced a decline of 6.4% sequentially and 11.6% year on year [22] - Digital spending in India, the Middle East, and Southeast Asia remained resilient [8] Company Strategy and Development Direction - The company is focusing on AI, data, and modernization programs, aligning with client priorities [5][6] - Emphasis on vendor consolidation and cost optimization as key drivers for deal wins [12][45] - The company aims to build an AI-first enterprise, integrating AI capabilities into industry solutions [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the macro environment, citing ongoing geopolitical uncertainties and tariff impacts [36][100] - Despite uncertainties, there is strong deal momentum in BFSI and technology sectors, with clients focusing on cost optimization and AI investments [37][102] - The outlook for the second half of the year appears positive due to a strong order book and healthy pipeline [18][71] Other Important Information - The board declared an interim dividend of INR 5 per share, distributing over $1,300 million in the last six months [26] - The company revised its capital allocation policy to pay out a minimum of 70% of net income over three years [27] Q&A Session Summary Question: What is the macro outlook right now? - Management acknowledged ongoing uncertainty in the macro environment, with geopolitical issues and tariffs affecting various industries [36] Question: What powered the Americas One performance despite sector declines? - Strong performance in health and communications sectors contributed to the growth in the Americas market unit [39] Question: Is discretionary demand returning? - Discretionary spending is returning in certain areas, particularly around AI and modernization projects [45] Question: How are large deal wins impacting financials? - Large deal wins will take time to ramp up, typically around six to eight quarters, but are expected to positively impact revenues [70] Question: What is the outlook for margins going forward? - Margins may face pressure due to upfront investments required for large deals, but management remains optimistic about maintaining profitability through operational excellence [98]