Summary of 4Q25 CIO Survey – Key Points Industry Overview - The survey focuses on the **US Tech** industry, particularly the **IT budget outlook** for 2026, highlighting trends in **Software**, **Communications**, **Hardware**, and **IT Services** sectors [2][40]. Core Insights 1. **IT Budget Growth Expectations**: - IT budget growth is expected to moderate from **+3.5% in 2025 to +3.4% in 2026**, a decline of **8 basis points** [2][40]. - Sequentially, the growth expectation for 2026 deteriorated from **+3.8% YoY** in the previous quarter [2][40]. 2. **Sector-Specific Trends**: - **Software**: Expected to see a modest acceleration in growth to **+3.8%** in 2026, up **9 basis points YoY** [2][40]. - **Communications**: Growth is expected to decelerate to **+2.2%**, down **27 basis points YoY** [2][40]. - **Hardware**: Anticipated growth is only **+1.0%**, a significant drop of **58 basis points YoY** [2][40]. - **IT Services**: Expected to grow by **+2.0%**, a slight decrease of **3 basis points YoY** [2][40]. 3. **Regional Insights**: - US CIOs expect budget growth of **+3.5%**, while EU counterparts anticipate **+3.1%**, indicating a narrowing gap between the two regions [2][40]. 4. **CIO Sentiment**: - The **1-year up-to-down ratio** for budget revisions fell to **0.5x**, indicating a more cautious outlook among CIOs [2][40]. - The percentage of CIOs expecting budget increases dropped to **17%**, while those expecting decreases rose to **36%** [2][40]. 5. **AI and IT Spending**: - **Artificial Intelligence** remains the top priority for CIOs, with **68%** planning to engage service providers for AI projects [40]. - **81%** of CIOs expect to have GenAI-based workloads in production by the end of 2026, up from **79%** in the previous quarter [40][37]. Additional Insights 1. **Hiring Expectations**: - **33%** of CIOs expect overall hiring to decrease in 2026, while **18%** expect an increase, reflecting a cautious hiring outlook [6][40]. - **63%** of CIOs believe AI-related IT spending will impact hiring plans, with a significant portion expecting hiring to decrease [6][40]. 2. **K-Shaped IT Budget**: - CIOs may be reallocating budgets from less strategic areas to prioritize AI-related investments, indicating a shift in spending dynamics [6][40]. 3. **Vendor Insights**: - Microsoft, Google, and Amazon are expected to gain the largest incremental share of GenAI spend in 2026, with Microsoft leading at **35%** [8][11][40]. - The survey indicates a trend towards consolidating IT spending with fewer vendors, particularly in software [6][40]. 4. **Concerns Over Hardware Spending**: - Hardware budgets are projected to grow at the slowest rate since 2009, raising concerns about potential demand destruction in the sector [18][40]. 5. **Long-Term Outlook**: - CIOs' confidence in the long-term spending environment has moderated, with only **38%** expecting IT spending as a percentage of revenue to increase over the next three years [40]. Conclusion The 4Q25 CIO Survey indicates a cautious outlook for IT budgets in 2026, with sector-specific deceleration, particularly in Hardware and Communications. Despite the excitement surrounding AI, the anticipated growth in IT budgets does not fully align with expectations, suggesting a need for strategic reallocations and a focus on consolidating vendor relationships.

Summary of IT Services Industry Conference Call Industry Overview - The conference call focused on the IT Services industry in North America, specifically discussing the 4Q25 CIO Survey results and expectations for 2026 budget growth in IT Services. Key Points 1. Budget Growth Expectations - IT Services budget growth for 2026 is expected to decelerate to **+2.0% y/y**, down from **+2.5%** in the previous quarter (3Q25) [1][3][9] - The 2025 budget growth expectations also decreased by **28 basis points** to **+2.0% y/y** from **+2.3%** [3][9] 2. Regional Insights - US CIOs anticipate a modest deceleration in IT Services spending, expecting growth of **+2.1%**, down from **+2.8%** in 3Q25 [9][17] - Conversely, EU CIOs expect a slight acceleration in spending intentions to **+1.9% y/y**, up from **+1.7%** [9][17] 3. Discounting and Competitive Environment - Willingness to discount services remains stable, with **30%** of respondents indicating Cognizant (CTSH) and **23%** for Accenture (ACN) showing readiness to discount [3][9] - A competitive pricing environment persists, with **54%** of respondents consolidating vendor relationships, consistent with previous surveys [9][60] 4. AI and Technology Priorities - Artificial Intelligence (AI) is the top priority for CIOs, with **68%** intending to engage a service provider for AI projects, a significant increase from **57%** in 2Q25 [4][10][59] - Security and Cloud Computing follow as the second and third priorities, with **58%** and **49%** of respondents respectively planning to engage service providers [10][59] 5. Spending Categories - Consulting and Systems Integration are leading spending categories, with **53%** of respondents expecting to increase spending in these areas over the next twelve months [9][38] - The interest in Generative AI is primarily in the proof-of-concept stage, indicating a gradual adoption process [4] 6. Project Delays and Macroeconomic Concerns - **42%** of respondents reported delays in IT Services-related projects due to macroeconomic concerns, slightly up from **40%** in 2Q25 [28][30] - Talent shortages are impacting service levels, with **50%** of CIOs indicating increased lead times from IT Services providers [33][35] 7. Vendor Consolidation and Market Positioning - ACN and TCS are identified as the largest share gainers in vendor consolidation, benefiting from their broad service offerings [60][67] - Wipro's spending intentions appear muted, with expectations of a marginal reduction in spend [73] 8. Risks and Market Sentiment - The overall corporate sentiment around IT Services spending is balanced, with **5%** of companies expecting to underspend and **28%** expecting to overspend, consistent with pre-pandemic levels [31] - Risks include potential recession impacts, talent shortages, and the ability to deliver contracted work [77][78] Conclusion - The IT Services industry is experiencing a slight deceleration in budget growth expectations for 2026, influenced by macroeconomic factors and competitive pricing pressures. AI remains a key focus area, with significant interest in consulting and systems integration services. The market sentiment is cautiously optimistic, with ongoing vendor consolidation shaping the competitive landscape.

It posted sequential revenue growth of 0.6% and year-on-year growth of 1.7% in constant currency terms. In dollar terms, revenues rose 0.5% sequentially and 3.2% year-on-year to $5 billion.TCS reported a 0.8% rise in revenue in constant currency terms but posted a 2.6% year-on-year decline. In contrast, HCLTech recorded stronger growth, with an increase of 4.2% quarter-on-quarter and 4.8% year-on-year. Infosys revised its revenue growth guidance for FY26 to 3%–3.5%, indicating improving visibility on demand ...

Core Insights - FPT has been recognized as a Major Contender in the Everest Group Banking IT Services PEAK Matrix® Assessment 2025, marking its first appearance in this industry benchmark [1] Group 1: Company Positioning - The assessment evaluated 41 providers in the banking IT services sector [1] - Providers are categorized into Leaders, Major Contenders, Aspirants, and Star Performers based on their capabilities [1] Group 2: Evaluation Criteria - The evaluation criteria include the ability to support modernization, adopt agentic AI in a responsible and scalable manner, and assist banks [1]

Core Insights - The U.S. Court of Appeals for the Fifth Circuit upheld a $194 million award to DXC's subsidiary, CSC, for trade secret misappropriation by Tata Consultancy Services (TCS) [1][2] - The court affirmed that TCS acted willfully and maliciously in misappropriating CSC's trade secrets, with over $100 million awarded in punitive damages due to TCS's repeated deceitful actions [2] Company Commitment - DXC Technology emphasizes its commitment to responsible innovation, ethical conduct, and the protection of intellectual property as fundamental to its operations [3] - The ruling is seen as a validation of DXC's six-year pursuit of legal action to protect its intellectual property, which is crucial for maintaining customer trust [2][3] Leadership Perspective - CEO Raul Fernandez stated that trust, ethics, and responsible innovation are core principles guiding DXC's operations, highlighting the importance of safeguarding mission-critical systems for clients [3] - The company aims to ensure that innovation is deployed responsibly, thereby strengthening customer trust and driving long-term business outcomes [3] Company Overview - DXC Technology is a leading enterprise technology partner that provides software, services, and solutions to global enterprises and public sector organizations, focusing on AI and modernization [4] - The company specializes in Managed Infrastructure Services, Application Modernization, and Industry-Specific Software Solutions, operating complex technology estates [4]

Core Insights - Coastal has been acquired by Tata Consultancy Services (TCS), enhancing its capabilities in Salesforce and data-led transformation on a global scale [1][2] - The acquisition allows Coastal to maintain its culture and customer-first approach while leveraging TCS's resources and expertise [2][4] Company Overview - Coastal, formerly known as Coastal Cloud, is a leading consultancy specializing in Salesforce, data, and AI, founded in 2012 [2][6] - The company has a team of over 600 professionals in North America, holding 3,091 certifications, including 442 in Agentforce, AI, and Snowflake [3] - Coastal has a five-star customer satisfaction rating on AppExchange and serves 1,700 customers [5][6] TCS Overview - Tata Consultancy Services (TCS) is a global leader in IT services and digital transformation, operating in 46 countries [1][7] - TCS generated consolidated revenues exceeding US $30 billion for the fiscal year ending March 31, 2025 [9] - The company has a workforce spread across 55 countries and 202 service delivery centers, recognized as a top employer on six continents [8]

Core Viewpoint - IBM will hold its quarterly conference call to discuss its fourth-quarter 2025 financial results on January 28, 2026 [1] Company Information - The earnings call is scheduled for 5:00 p.m. ET [1] - A live webcast of the earnings call will be available at www.ibm.com/investor [1] - An earnings press release will be accessible prior to the webcast on the investor website [1] - A replay, associated charts, and prepared remarks will be available after the event [1]

Financial Data and Key Metrics Changes - Revenues for Q3 FY 2026 were $5.1 billion, reflecting a sequential growth of 0.6% and a year-on-year growth of 1.7% in constant currency terms [5][11] - Adjusted operating margin for Q3 was 21.2%, with a reported margin of 18.4% impacted by changes in labor codes [11][12] - Free cash flow generated was $915 million, with an adjusted free cash flow conversion for nine months standing at 118% [15][16] - The company revised its revenue growth guidance for FY 2026 to 3%-3.5% in constant currency [9][21] Business Line Data and Key Metrics Changes - Large deal total contract value (TCV) for Q3 was robust at $4.8 billion, with 57% being net new deals [14][17] - Financial services vertical saw a year-on-year growth of 3.9% in constant currency terms, with Europe leading growth at 7.2% [12][17] - The healthcare sector benefited from a significant $1.6 billion deal with the National Health Service in the UK, contributing to incremental revenues [5][39] Market Data and Key Metrics Changes - The company signed 26 large deals during the quarter, with 10 in financial services and 16 in the Americas [17][18] - There is a noted shift in client priorities towards AI-led transformation and vendor consolidation across various sectors [19][20] - The manufacturing vertical is facing challenges due to tariff uncertainties, while the energy sector is witnessing increased demand driven by infrastructure investments [18][19] Company Strategy and Development Direction - The company is expanding its strategic partnerships with AI companies and has deepened its AI capabilities with the Topaz AI suite [6][8] - Six AI-led value pools have been identified as significant growth opportunities, including AI engineering services and legacy modernization [8][9] - The company aims to position itself as a leading AI value creator for global enterprises, with a focus on driving value realization from AI investments [9][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory for FY 2027, particularly in financial services and energy sectors, driven by strong deal wins [9][21] - The operating environment remains challenging, with a focus on cost discipline and efficiency among clients [20][21] - Management highlighted the importance of AI in driving future growth and the increasing demand for AI infrastructure and services [19][20] Other Important Information - The company completed its largest-ever buyback, returning INR 18,000 crores to shareholders, which is expected to aid in EPS accretion [16] - The labor code changes had a notable impact on operating profit, net profit, and free cash flow for the quarter [11][12] Q&A Session Summary Question: Why is the implied outlook for Q4 not stronger despite strong signings? - Management indicated that while there is strong momentum, the lower working day calendar in Q4 presents a headwind [25][29] Question: Are there signs of discretionary spending expanding beyond financial services and energy? - Management confirmed that growth is expected in financial services and energy, but other sectors are still emerging [25][26] Question: Is AI a headwind or tailwind for margins? - Management stated that AI projects are not negatively impacting pricing and are seen as accretive [30][32] Question: What is the outlook for North America and specific industries? - Management noted a contraction in North America due to lower third-party costs across segments [35][36] Question: How is the healthcare sector performing? - The healthcare sector saw significant growth, partly due to the NHS deal, with expectations for continued contribution [39][41] Question: What is the impact of new labor laws on margins? - The recurring impact of new labor laws is expected to be approximately 15 basis points on an ongoing basis [61][62]

Financial Data and Key Metrics Changes - Revenues for Q3 FY 2026 were $5.1 billion, reflecting a sequential growth of 0.6% and a year-on-year growth of 1.7% in constant currency terms [11][12] - Adjusted operating margin for Q3 was 21.2%, with a reported margin of 18.4% impacted by changes in labor codes [12][16] - Free cash flow for the quarter was robust at $965 million, representing 113% of adjusted net profit [16] - The company revised its revenue growth guidance for FY 2026 to 3%-3.5% in constant currency [9][22] Business Line Data and Key Metrics Changes - Financial Services saw a year-on-year growth of 3.9% in constant currency terms, with strong momentum in large deals and discretionary projects [12][17] - The healthcare sector benefited significantly from a $1.6 billion deal with the National Health Service in the U.K., contributing to incremental revenues [5][40] - The manufacturing vertical is facing challenges, particularly in the automotive sector, while some strength is noted in data center supply capabilities [57][58] Market Data and Key Metrics Changes - Europe led growth with a 7.2% year-on-year increase in constant currency terms [12] - The Americas experienced a contraction of approximately 1% year-on-year, attributed to lower third-party costs across segments [35][36] - The energy and utilities sectors are expected to see growth acceleration in FY 2027, driven by increased discretionary spending [20][22] Company Strategy and Development Direction - The company is focusing on expanding its AI capabilities, with 90% of its largest clients engaged in AI projects and a total of 4,600 AI projects underway [6][9] - Infosys aims to capture market share across six identified AI value pools, including AI engineering services and legacy modernization [8][9] - Strategic partnerships with AI companies, such as Cognition, are being pursued to enhance service offerings [6][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the uncertain environment, citing strong year-to-date performance and robust deal wins [22] - The company anticipates a shift from compliance to business growth in Financial Services, with elevated interest in AI-led transformation [18][21] - There is a cautious optimism regarding discretionary spending in various sectors, with expectations for growth in FY 2027 [9][22] Other Important Information - The company completed its largest-ever buyback, returning INR 18,000 crores to shareholders, which is expected to aid in EPS accretion [16] - Adjusted EPS in Rupee terms grew by 11.5% year-on-year for the nine-month period [16] - The impact of new labor laws is expected to result in a recurring margin impact of approximately 15 basis points [60] Q&A Session Summary Question: Why is the implied outlook for Q4 not stronger despite strong signings? - Management noted that while there is strong momentum, the lower working day calendar in Q4 presents a headwind [26][29] Question: Are there signs of discretionary spending expanding beyond Financial Services and energy? - Management confirmed that growth is expected in Financial Services and energy, but other sectors are still emerging [26][27] Question: Is AI a headwind or tailwind for margins? - Management indicated that AI projects are not negatively impacting pricing and are seen as accretive [30][32] Question: What is the outlook for North America? - Management expects a contraction in North America due to lower third-party costs across segments [35][36] Question: How are clients approaching their 2026 budgets? - There is increased activity in AI and discretionary spending in Financial Services, with expectations for growth [36][37] Question: What is the impact of the NHS deal on healthcare growth? - The NHS deal contributed significantly to healthcare growth, with expectations for residual contributions [40][41] Question: What is the recurring impact of new labor laws on margins? - The recurring impact is expected to be approximately 15 basis points going forward [60]

Financial Data and Key Metrics Changes - Revenues grew 0.6% sequentially and 1.7% year-on-year in constant currency terms, reaching $5.1 billion [3][8] - Adjusted operating margin was 21.2%, while the reported operating margin, impacted by labor code changes, was 18.4% [8][9] - Free cash flow generated was $915 million, with an adjusted free cash flow conversion for nine months standing at 118% [8][12] - The company revised its revenue growth guidance for FY26 to 3%-3.5% in constant currency [6][18] Business Line Data and Key Metrics Changes - Large deals totaled $4.8 billion in Q3, with 57% being net new deals, across 26 deals [3][11] - Financial services saw a year-on-year growth of 3.9% in constant currency terms, with strong momentum in large deals and discretionary projects [9][14] - The healthcare sector benefited from a significant $1.6 billion deal with the National Health Service in the UK, contributing to incremental revenue growth [3][35] Market Data and Key Metrics Changes - Europe led growth with a 7.2% year-on-year increase in constant currency terms [9] - The Americas saw a contraction of approximately 1% year-on-year, attributed to lower third-party costs across segments [30][31] - The company is witnessing increased demand for AI-led transformation and modernization across various sectors, particularly in financial services and energy utilities [16][18] Company Strategy and Development Direction - The company is focusing on expanding its AI capabilities, with 90% of its 200 largest clients engaged in AI projects [4][6] - Six AI-led value pools have been identified as significant growth opportunities, including AI engineering services and legacy modernization [5][6] - Strategic partnerships with AI companies, such as Cognition, are being pursued to enhance service offerings [4][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model and the relevance of offerings despite seasonal weaknesses [8] - There is an expectation of growth acceleration in FY27, particularly in financial services and energy utilities, driven by strong deal wins [6][18] - The company anticipates a shift from compliance to business growth in financial services, with increased discretionary spending expected [15][18] Other Important Information - The company completed its largest-ever buyback, returning INR 18,000 crores to shareholders, which is expected to aid in EPS accretion [12] - Labor code changes had a notable impact on operating profit, net profit, EPS, and free cash flow for the quarter [8][9] - The company is investing in talent, with a net headcount increase of 5,000 to 337,000 employees [10] Q&A Session Summary Question: Why is the implied outlook for Q4 not stronger despite strong signings? - Management noted that while there is strong momentum, lower working days in the quarter are a headwind for guidance [22][25] Question: Are margins under pressure due to pricing? - Management indicated that pricing has been accretive, with no significant headwinds from AI projects affecting margins [26][27] Question: What is the outlook for North America? - Management expects a contraction in North America due to lower third-party costs across segments [30][31] Question: Is there a shift in AI strategy across verticals? - Management confirmed increased interest in AI across various industries, with financial services showing significant momentum [41][82] Question: What is the impact of new labor laws on margins? - The recurring impact of new labor laws is expected to be approximately 15 basis points on an ongoing basis [55]