Financial Data and Key Metrics Changes - IT Services revenue for Q1 was $2.59 billion, reflecting a quarter-on-quarter decline of 2% in constant currency terms, which is within the guidance range [8][21] - IT Services margin was 17.3%, an expansion of 80 basis points year-on-year [8][22] - Net income grew by 10.9% year-on-year, with EPS at INR 3.20, reflecting a 10.8% year-on-year increase [25][26] - Free cash flow generation was robust at 115% of net income, with gross cash including investments at $6.4 billion [26][27] Business Line Data and Key Metrics Changes - In the Americas, revenue grew 1.5% year-on-year in constant currency terms, while APMEA's revenue remained flat [9][23] - BFSI sector declined 3.8% sequentially and 3.5% year-on-year, while Healthcare grew 0.5% sequentially and 3.5% year-on-year [24] - Capco grew 6% year-on-year, driven by strong performance in Latin America [9][24] Market Data and Key Metrics Changes - Europe faced headwinds with a sequential decline of 6.4% and a year-on-year decline of 11.6% [23] - Digital spending in India, the Middle East, and Southeast Asia kept the market resilient [9] Company Strategy and Development Direction - The company is focusing on AI-led efficiency and transformation, with a strategic shift towards consulting-led and AI-powered solutions [16][47] - The management emphasized the importance of vendor consolidation and cost takeout deals, which are expected to drive future growth [12][22] - The company aims to maintain a balance between renewing existing contracts and securing new business [13][111] Management's Comments on Operating Environment and Future Outlook - Management noted significant macro uncertainty affecting overall demand, with clients prioritizing cost optimization and AI initiatives [6][7] - The outlook for the second half of the year is positive, supported by a strong order book and healthy pipeline [19][56] - The company is guiding for a sequential revenue growth of -1% to +1% in constant currency terms for the next quarter [19][28] Other Important Information - The Board declared an interim dividend of INR 5 per share, with a commitment to pay dividends twice a year [27][28] - The company reported bookings worth $5 billion in total contract value, a growth of 51% year-on-year, with large deal bookings reaching $2.7 billion, up 131% year-on-year [12][22] Q&A Session Summary Question: On deal wins and ACV growth - Management acknowledged that while TCV has grown, ACV growth has not kept pace due to longer deal tenures and a focus on cost takeout [31][32] Question: On capital allocation and dividend policy - The company has moved towards a dividend-focused capital allocation policy, with buybacks remaining an option for the future [34] Question: On margins and deal execution - Management indicated that while current margins are strong, there may be pressures due to upfront investments in large deals, but they aim to maintain margins in the 17% to 17.5% range [40][52] Question: On customer-specific challenges in Europe - Management stated that client-specific challenges in Europe are largely behind them, and they expect stabilization and growth in the second half of the financial year [99][100] Question: On discretionary spending trends - Management noted that discretionary spending is returning in pockets, particularly around data, AI, and modernization projects [113]

Financial Data and Key Metrics Changes - The company reported a 19% year-over-year revenue growth and a 2% quarter-over-quarter growth, despite typical seasonality effects [10] - Adjusted gross profit also grew by 19% year-over-year but decreased by 3% sequentially, primarily due to lower transaction volumes and increased costs [10] - Adjusted net income increased by 23% year-over-year but decreased by 17% quarter-over-quarter, attributed to lower adjusted gross profit and higher investments [10] - Adjusted basic EPS was BRL1.97 per share, reflecting a 36% increase year-over-year but a 13% decrease sequentially [10] Business Line Data and Key Metrics Changes - The Financial Services segment saw revenues grow by 20% year-over-year, driven by repricing initiatives [18] - The Software segment's revenues increased by 11% year-over-year, mainly due to higher recurring revenues and an increase in the active client base [19] - The MSNB payments active client base grew by 17% year-over-year, reaching 4.3 million clients [11] Market Data and Key Metrics Changes - Total client deposits reached BRL8.3 billion, a 30% increase year-over-year but a 5% decrease sequentially due to seasonality [13] - The company’s distribution yield reached 12% over the past twelve months, indicating strong capital allocation strategy [7] Company Strategy and Development Direction - The company is focused on profitability and has implemented a disciplined capital allocation strategy, including a new share repurchase program of up to BRL2 billion [8] - The strategy includes a cash sweep initiative to convert retail deposits into time deposits, optimizing funding costs and capital structure [14][15] - The company aims to prioritize profitability over pure volume growth in response to changes in the repricing policy [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging macroeconomic environment with rising interest rates but expressed confidence in navigating these challenges [9] - The company expects some deceleration in TPV growth due to repricing efforts and macroeconomic conditions, but overall trends align with long-term guidance [31] - Management remains optimistic about the long-term growth potential, targeting a 14% CAGR for TPV until 2027 [49] Other Important Information - The company repurchased BRL843 million worth of shares during the quarter, contributing to a total of BRL2.4 billion in share buybacks over the past twelve months [7] - The effective tax rate was 19.7%, down from 20.6% in the previous year, reflecting improved tax efficiency [24] Q&A Session Summary Question: Outlook for TPV growth - Management indicated that TPV growth is expected to decelerate somewhat due to repricing efforts and macroeconomic challenges, but overall trends are in line with long-term guidance [31][32] Question: Negotiations regarding LINX - Management confirmed ongoing negotiations with Totus for the sale of LINX, with positive progress but no specific timeline available [36] Question: Impact of competition from Mercado Pago and Fiserv - Management noted that while competition is monitored closely, they have not seen significant impacts from global players entering the market [63] Question: Cash conversion and net cash position - Management explained that the decline in net cash was due to seasonal effects and one-off items, with expectations for improved cash generation in future quarters [78][82] Question: Take rates and financial income - Management stated that take rates are becoming less relevant as a metric, focusing instead on adjusted gross profit relative to TPV, which showed a slight increase [84]