Firstsource Solutions Limited (FSL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Firstsource Solutions Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. On this call, we have Mr. Ritesh Idnani, MD and CEO; and Mr. Dinesh Jain, CFO, to provide an overview on the company's performance, followed by a Q&A session. Please note that some of the matters discussed on this call, including the company's business outlook, are forward-looking and as such, are subject to known and unknown risks. These uncertainties and risks are included, but not limited to what the company has mentioned in its prospectus filed with SEBI and subsequent annual report that are available on its website. I now hand the conference over to Mr. Ritesh Idnani, MD and CEO; and Mr. Dinesh Jain, CFO, from Firstsource Solutions. Thank you, and over to you, sir.

Thank you, and hello, everybody. My name is Ritesh Idnani, I'm the MD and CEO at Firstsource. Thank you for joining us today to discuss our financial results for Q1 FY '27. The first quarter reinforces a simple belief for us: sustainable transformation is built on execution. As clients navigate a rapidly evolving business and technology landscape, they are looking for partners who can combine innovation with accountability and deliver measurable outcomes. At Firstsource, we remain focused on doing exactly that, leveraging our domain expertise, digital capabilities and talented teams to help clients move from intent to impact. I would like to thank each one of our 36,875 Firstsourcers around the world for their relentless commitment to delivering exceptional value to our clients. Let me start with a discussion on Q1 performance. Q1 marks the ninth straight quarter of double-digit year-on-year revenue growth and the 11th straight quarter of sequential revenue growth. Our revenue grew by 22.9% year-on-year and 5.5% quarter-on-quarter and came in at INR 27.2 billion. In U.S. dollar terms, the growth was 11.2% year-on-year and 1.8% quarter-on-quarter to USD 288 million. In constant currency terms, our revenue grew 12.3% year-on-year and 2.2% quarter-on-quarter. EBIT margin for the quarter was 12.4%, up 110 basis points and 20 basis points on a year-on-year and quarter-on-quarter basis, respectively. Our adjusted net profit was INR 2.2 billion, and the diluted EPS for the quarter was INR 2.36. Coming to the business highlights. I will start with our deal wins and other client-related metrics. In Q1, we signed 4 large deals. This is the sixth consecutive quarter of 4 or more large deals for us at Firstsource. As you're aware, we consider a deal with ACV over $5 million as a large deal. Our ACV intake remained healthy and was, in fact, the highest in the last 4 quarters. I am encouraged by the strength of our wins, both in number and scale. This reflects our ability to bring together deep industry and functional expertise, strong technology ecosystem partnerships and an AI-first automation approach that's delivering clear outcomes for clients, better customer experience, faster decision-making and a lower cost to serve. I would like to emphasize that several of our wins are transformative and ramp up in phases unlike traditional steady-state work. So while they strengthen long-term growth visibility, revenue conversion is typically spread over a longer period as transformation and enablement milestones are completed. Let me now highlight a few of our notable wins during Q1. We secured a large transformative deal with a leading U.K.-based benefits and pension administration provider for end-to-end back-office transformation and resource optimization. We also won a large deal from a leading academic medical center in the U.S. for insurance follow-up, denials management and complex claims resolution. This incidentally is also a new logo for us. We expanded our relationship with a leading public health system in the U.S. for patient contact center and self-pay early-out services. We secured a new deal with a U.S.-based health insurance provider on the customer experience side. A leading on-demand manufacturing marketplace in the U.S. selected us to provide account servicing as well as customer experience services. A leading international public transport and shared mobility operator selected us for customer service operations across Europe. And we also expanded our relationship with a U.K.-based fiber broadband provider for customer experience services delivered from South Africa. During the quarter, we added 12 new logos, which included 3 strategic logos. We define a strategic logo as one where we see potential of at least a $5 million-plus annual relationship, and we run a structured program to handhold and monitor such relationships to grow them at an accelerated pace. Let me now turn to our vertical performance, starting with Banking and Financial Services. In Q1 of FY '27, our BFS vertical grew 14% year-on-year and 5% sequentially in constant currency terms. We added 5 new logos during the quarter. In BFS, client interest remains particularly strong around intelligent operations, customer servicing, financial crime, compliance and collections use cases. We are progressing several engagements that combine our deep domain expertise with our Kairos Intelligent Context Framework, enabling clients to apply AI within highly regulated environments with the right business context, governance and operational controls. Within the vertical, collections demand remains strong as U.S. consumer debt touched record highs...

I'm sorry to interrupt, sir. I would request you to come a little closer to the microphone. Your voice is fading away.

Sure.

Yes, much better.

Within the vertical, collections demand stayed strong as U.S. consumer debt touched record highs, keeping volumes and servicing complexity elevated. In mortgage, high rates and subdued refinancing kept clients focused on cost takeout, simplification as well as on servicing efficiency, where our AI-enabled transformation is resonating. We are also expanding with midsized banks and fintechs as they modernize platforms and embed AI across onboarding, servicing and collections. Our Q1 exit deal pipeline in financial services was amongst the strongest in recent quarters, giving us confidence in sustaining growth momentum in this vertical. In Healthcare, revenues grew 11% year-on-year, but declined 2% sequentially in constant currency terms. However, we added 4 new logos during the quarter. Healthcare continues to be a core growth pillar and a key area of strategic differentiation for Firstsource with a well-diversified footprint across both the payer and provider segments that gives us an end-to-end view of the healthcare value chain. What sets us apart is production-grade AI delivery across the revenue cycle and an outcome-based commercial model, exactly where our payer and provider clients are heading. In Healthcare Provider, our clients are contending with flat reimbursement, rising labor costs and regulatory uncertainty from H.R.1. This is accelerating a structural shift towards AI and automation-led RCM delivery where transactional volume is increasingly being repriced as a technology service. Our AI delivery is well past proof-of-concept out here. Outbound voice AI agents are now standard across eligibility, early out and patient financial services, and are expanding into inbound bad debt and contact center workflows, which is creating additional opportunities for us. And denials, AI has become a de facto AI-first denials platform with human oversight on exceptions. On the Healthcare Payer side, Q1 revenue reflected program timing effects as several Medicare Advantage clients recalibrated operational program scope in response to CMS rate adjustments and evolving utilization management requirements. This was a pacing effect, not a demand shift. The underlying client relationships remain intact with a healthy deal pipeline. The regulatory environment creating near-term friction for our clients is the same environment that makes outcome-accountable operational partnerships structurally more valuable. Within Healthcare, I also want to give you some color on one of our transformative BPaaS engagements. As we have consistently said, deals of this nature are nonlinear. They ramp over an extended period. And occasionally, if there is a shift in client priorities, they de-ramp. One of our payer engagements is being wound down following a leadership change at the client's end and a consequent reset of its strategic priorities. This is a client-side decision, and it is consistent with what we might sometimes see across the industry. Importantly, because this engagement was still in the early phase of its ramp and had not reached its steady-state run rate, the impact of this on our reported revenue is limited. Our delivery on the program has been strong. We continue to retain a meaningful footprint in the account. This continues to be a strategic logo for us, delivering more than $5 million of annual revenue and our broader Healthcare franchise remains among our most strategic and differentiated vertical with a healthy deal pipeline and continued new logo momentum. Coming to the CMT vertical, revenues grew 6% year-on-year and 9% on a quarter-on-quarter basis. We added 2 new logos during the quarter. The reported numbers continue to reflect the inherent volatility in this segment, particularly the timing of work package and program transitions in some of our consumer tech engagements in Silicon Valley. On the telecom and cable side, clients continue to explore AI-led improvements in customer service, agent productivity and service assurance. We see early adoption of our domain harness approach where industry-specific knowledge, operational workflows and AI capabilities are brought together to accelerate deployment and the realization of business outcomes. More broadly, across our communications, media and tech verticals, we continue to see strong client interest in AI enablement and nontraditional tech-led solutions. We are exiting the quarter with a well-balanced pipeline across telecom, edtech, media and technology clients, which give us confidence to return to a healthier growth trajectory as transitions complete and volumes normalize. Lastly, our diverse portfolio grew 27% year-on-year and was flat sequentially in constant currency terms with 1 new logo added during the quarter. In utilities, the underlying demand remains steady, supported by a healthy pipeline, and we are optimistic on conversion over the coming quarters. With Pastdue Credit, we continue to strengthen our position in the U.K. utilities ecosystem, which has also opened up cross-sell opportunities across customer operations and collections. In the last quarter, 2 of the Pastdue Credit clients also expanded their footprint into the customer service and collection side with us. In retail, demand is centered around improving customer experience, lowering service costs and enabling more personalized interactions. And our conversations are increasingly about embedding intelligence directly into operational processes, helping clients balance customer growth ambitions with the need for continued efficiency. Overall, we exited the quarter with a well-qualified healthy pipeline across both utilities and retail, which give us confidence in improving momentum as seasonal effects normalize and new wins ramp up. From a geographic standpoint, North America delivered 8% year-on-year growth and was flat sequentially in constant currency terms. We continue to see broad-based momentum across our 3 core verticals in the region and expect to sustain this over the coming quarters. In parallel, we are also incubating new growth opportunities in North America by setting up our sales presence in Canada and by replicating capabilities where we have demonstrated strength in other markets such as utilities and retail from the U.K. into the U.S. Europe had a strong quarter, growing 18% year-on-year and 6% quarter-on-quarter in constant currency terms with further upside ahead. We continue to deepen relationships and gain share of wallet in the region. As we have highlighted in the past, we have seen an accelerated move towards offshore and nearshore delivery over the past few quarters with several of our clients. While this may continue in the near term, we believe our proactive steps to make the business more resilient by broadening both our geographic and vertical presence are yielding results. Also, our pitch for transformational programs and nearshore delivery from South Africa has been resonating strongly with clients, and South Africa is our fastest-growing geography today. We also expanded our U.K. delivery footprint for regulatory work with a new office in Glasgow, supporting financial services clients on the financial assistance and anti-fraud services, a strong fit, given the city's deep financial services talent ecosystem. Overall, we won 2 large deals in Europe, and our pipeline continues to build well, supporting our view of a gradually improving growth trajectory in Europe as conversions and ramps play out. Australia had a strong quarter with revenue doubling on a year-on-year basis from the additional business, both with existing clients as well as new logos, and we continue to build a very strong pipeline in the region. On the people front, we continued advancing our Intelligence That Operates strategy, building a future-ready workforce through disciplined hiring, stronger workforce intelligence and AI-enabled people operations. We closed Q1 of FY '27 with a head count of 36,875 Firstsourcers, a net increase of 670 associates over Q4 of FY '26 with strategic client demand driving growth across our core delivery geographies. Our voluntary attrition was 27.5% for the quarter. Our offshore and nearshore hiring remained a strategic lever, accounting for close to 80% of gross additions, preserving deep domain expertise while supporting cost and outcome economics. We continue to strengthen workforce stability through predictive workforce intelligence, AI-enabled retention insights and targeted interventions across critical talent segments. Let me also share a few interesting developments on how we are applying this thinking inside our own organization. Building on our U.S. early attrition work, we rolled out an early engagement framework across operations and HR with a real-time console that flags attrition risk by process and region before it peaks. We are also embedding AI across people operations to give leaders faster predictive insight. Together, these steps bring Intelligence That Operates to life within Firstsource, using AI not just to automate HR, but also to improve how we lead, engage and grow our people. During the quarter, our work continued to earn external recognition. Everest Group named Firstsource a Major Contender in Revenue Cycle Management Intelligent Operations PEAK Matrix of 2026, and ISG placed us in the Breakthrough 15, which is a USD 1 billion to USD 3 billion tier, a move up from the Booming 15 as our revenues crossed $1 billion. Our continued investment in employee experience and culture was recognized through 4 global employer brand awards, including recognition as one of India's Top 100 Best Companies to Work For alongside Top Inspiring Workplace recognitions across the U.K., U.S. and Australia, reflecting the strength of our employee value proposition and our ability to attract and retain high-quality talent globally. I will now turn over the call to Dinesh to give a detailed color on the quarterly financials. I will come back to talk about our progress on the strategic priorities and the outlook for FY '27. Over to you, Dinesh.

Thank you, Ritesh. Hi, everyone. Let me start by taking you through our quarterly financial performance. Revenue for the Q1 FY '27 came in at INR 27.2 billion or USD 288 million. In constant currency terms, revenue grew 12.3% year-on-year and 2.2% on a quarter-on-quarter basis. This is our 11th straight quarter of the sequential growth. We delivered an EBIT of INR 3,367 million or 34.8% increase over the last year with an EBIT margin of 12.4%. This is again -- also again seventh straight quarter of the margin improvement with the margin up 110 basis points year-on-year and 20 basis points quarter-on-quarter basis. On an adjusted basis, profit after tax was INR 2.2 billion or 8.2% of the revenue, up 31.2% year-on-year and 8.3% sequentially. During the quarter, we also recognized a onetime exceptional charge of INR 717 million or INR 563 million net of taxes. This comprises of 3 items. Let me take you through one by one, all 3. As Ritesh mentioned earlier while discussing the Healthcare segment, we recorded a charge of INR 357 million or net of tax INR 271 million relating to one of the program termination on one of the customer. The resolution process for this program or with the customer in phased manner with the first phase, we already completed and we have realized the amount. Discussions continue to be constructive, and we are actively pursuing recoveries for our balance full contractual entitlements from the client over the coming quarter, including this charge, which we have taken on a prudent basis. Secondly, we also recorded a charge of INR 284 million or net of tax INR 216 million relating to the indemnification of a regulatory penalty to a customer arising from one of the contractual performance matter. We have filed a claim under our insurance policy and are actively pursuing recovery. Based on the policy coverage, we remain optimistic about a favorable outcome. Again, on a prudent basis, we need to account for this charge because, strictly speaking, when you have actual certainty of the recovery from the insurance only, we can recognize the charge back. So till the time, we have to take this charge. Third, we recognized INR 76 million relating to a fair value adjustment on contingent consideration payable in respect of the Ascensos acquisition, which we did last year. And this is a positive sign because they have delivered over the margin and also on the revenue guidance, and that's the reason this additional charge which we are taking to the profit and loss account. Including these items, reported profit after tax was INR 1.7 billion. These items are nonrecurring in nature and do not reflect the underlying operating performance of the businesses. Our tax rate for the quarter was around 23%. We have moved to the new tax regime this year in India, which let us draw down our MAT credit and save on the cash taxes over the time. And that's the reason the effective tax rate this year going to be between 22% to 24%. Turning to the balance sheet. Our cash and bank balances stood at INR 3 billion and net debt was INR 17.1 billion versus INR 16.3 billion at the end of the March 2026. Normalized DSO continue to be in the range of 67 to 69 days. Our FCF to PAT normalized for subsequent collection, which -- especially on one of the account as an exceptional item I talked about, continue to be at around 94%. Our hedge book as of June 30, 2026, was as follows. We had a coverage of GBP 61.6 million for the next 12 months with an average rate between INR 118 to INR 120 and coverage of USD 119 million with an average rate of INR 92.7 to $1. And also in the sum of the forward book, we also have some option products, which are basically to enhance the further rates which we as of today contracted to. With that, I will hand back to Ritesh to discuss about the strategic priority. Ritesh, over to you.

Thank you, Dinesh. As we close the first quarter, I have been thinking about what separates organizations that talk about transformation from those that are actually in it. It isn't the technology. It isn't even the strategy. It's whether the people inside the business know without being told what they are accountable for and why it matters. We have called this a year of accountability, but accountability isn't something you declare, it's something other people experience. Our clients experience it when we solve the problem they trusted us with. Our colleagues experience it when we follow through on our commitments, and we experience it ourselves when we choose to own the outcome, not just the activity. That distinction has never mattered more. Every leader we work with is under pressure to deliver meaningful transformation. They're invested in AI, committed to new ways of working and set ambitious expectations for their organizations. What they're looking for isn't another company to advise them; it's a partner that will help them execute, adapt when things change and stand behind the outcome. That's the standard we are setting. This quarter, the story moved from conviction to contact. We took Kairos, our AI native operating system, to clients across geos, and these were not just product demonstrations. They were conversations with leaders trying to move beyond AI experimentation to real operational change. Across every discussion, one message stood out: technology alone doesn't create business value; execution does. The same thinking is shaping our work inside Firstsource. Rather than talking about what's possible, we are implementing AI across our entire operations, learning from every deployment and applying those lessons to help clients move faster and with greater confidence. Every implementation strengthens our own expertise. Every outcome makes us a better partner. And the proof is in production across the domain AI platforms that we now run across mortgage, healthcare intake and collections, which are not pilots. They are live operations at scale for some of the largest institutions in their markets, delivering measurable outcomes. Let me make that concrete because the strongest proof isn't a concept; it's what's already running. This quarter, for a large U.S. telecom client, we delivered an AI-powered audit engine alongside a suite of real-time Gen AI tools. The audit engine integrated with dialers to preempt unnecessary technician visits, real-time agent-assist driving first-time-right resolutions and AI-led feedback analysis and QA, together delivering meaningful cost reductions and faster, more personalized customer engagement. These aren't isolated experiments. The same model is already in production at scale, where our AI platforms run for 14 of the top 20 U.S. mortgage lenders, 10 of the top 15 U.S. health plans and top 5 U.S. and U.K. card issuers. That's the clearest evidence that Intelligence That Operates works. Executing at this standard is not something we do alone. Our partner ecosystem has become a real growth engine and a competitive differentiator. We have expanded our dedicated partnerships team and deepened collaboration with leading hyperscalers, building momentum on AWS-based AI and automation and also taking similar opportunities to clients on Google Cloud. Beyond the hyperscalers, we announced 3 key relationships as well, which show the power of the model. Zendesk, we are moving past simple automation to jointly build vertical-specific service solutions, starting with retail, extending into financial services and healthcare that embed Firstsource domain expertise directly into their AI native platform. As adoption scales, our role expands from service delivery into platform-enabled recurring value. The second one is Cresta, where we have stood up a dedicated AI center of excellence that pairs their real-time AI decisioning with our CX and transformation design, consulting and implementation services. And finally, we partnered with a bunch of start-ups from Silicon Valley, which are targeted investments to continue to strengthen our Intelligent Context Framework, the layer of Kairos that captures how work actually gets done and turns tribal knowledge into executable intelligence. Every deployment makes that intelligence stronger. Strategy only compounds when someone owns it. So this quarter, we put dedicated leadership behind where we believe the next wave of demand is leading. We have stood up 5 new growth engines, each with a leader whose single mandate is to build and scale it. To extend our reach in new geographies, the Middle East, South Africa and Canada, we also introduced 3 new capability frontiers, a U.S. retail and CPG practice built for the age of agentic commerce, a marketing services offering that closes the growth and retention loops between customer operations and marketing teams and a security and resiliency services business that brings AI-era security leadership to our industry for the first time. These are deliberate moves that help our clients embrace AI to grow their business while doing so with the right trust and governance controls. While still at an early stage, these initiatives are creating a healthy pipeline of AI-led opportunities across the region and reinforce our position as a partner capable of combining deep industry expertise, operational excellence and applied AI to deliver measurable business outcomes. Let me close with the numbers behind the story. We ended the quarter with 145 clients generating over $1 million in revenue run rate, and both our $10 million and $5 million cohorts grew by 3 each in the quarter. The 2-year trend, however, is where the signal is the clearest. Our $5 million-plus clients are up 80% over the past 2 years, the strongest evidence of wallet deepening and strategic account expansion as clients trust us with their most important work. Underneath that, our $1 million-plus clients are up 45% over the same period, broad-based additions that keep refilling the pipeline of tomorrow's $5 million-plus conversions. That broad-basing is deliberate. Over the last 8 quarters, the revenue share of our top 5 and top 10 clients has come down. And importantly, that has happened even as our top 5 clients continue to grow at industry rates despite a significant onshore-to-nearshore shift in at least a couple of them. We are also winning more large deals and winning them more consistently. A dedicated team now brings more sharper focus to every large pursuit, covering all the aspects that go into a win, which has allowed us to now report at least 4 large deals in each of the past 6 quarters. In Q1, we won 12 new logos and 4 large deals, and our large deal intake continues to carry a healthy share of new logo wins. This underlies the strength of our differentiated solutions, the attractiveness of our commercial construct and a growing client acceptance of us as a disruptor. This is the chapter that we are now writing. Accountability is our standard, execution is our proof and Intelligence That Operates is what puts Firstsource in a category of one. It gives me confidence that we are on the right trajectory to deliver sustainable, profitable and industry-leading growth. With that, the floor is open for questions that you might -- before we get to the questions, let me just provide one more key point. I want to provide our outlook for FY '27. We are reaffirming the full year guidance we set out at the start of the year. On revenue, we continue to expect constant currency growth of 10% to 13% for FY '27. On margins, we continue to guide to an EBIT margin band of 12.25% to 12.75%. Importantly, our original guidance had factored in roughly about 1% to 1.5% of growth from the healthcare BPaaS engagement that is now being wound down because of the leadership change and intent to continue with the same technology platform that they earlier had. Even after absorbing that, we are holding our guidance unchanged, a reflection of the underlying strength and breadth of the rest of our portfolio with large deals ramping, a healthy pipeline and continued new logo momentum offsetting it. We believe this places us comfortably in the top decile of growth in the industry. This concludes our opening remarks, and we can now open the floor for questions. Operator, over to you.

[Operator Instructions] The first question comes from the line of Vibhor Singhal with Nuvama Equities.

Ritesh, a couple of questions from my side. Obviously, on the client contract termination. So as you mentioned that we were expecting around 1.5% kind of growth on this contract for the full year which will now not be possible, can you just help us with what was the impact of this project termination on the growth in this quarter? I'm assuming the decline in the Healthcare vertical Q-on-Q in this quarter would also have to do something with that. So what was the kind of impact in this quarter on the revenue growth? And the INR 271 million charge that we have booked under the exceptional items, what does that include? Does that also include some unbilled revenue which we had booked and which we had to reverse? So the nature of that? And how much of that do you believe is kind of recoverable during our negotiations with the client?

So let me start with a little bit of color on the healthcare BPaaS engagement itself. The thing to bear in mind out here is that there was a leadership change that happened at the client end. As you might be aware, this is not uncommon when leadership changes, priority shift, decisions of this nature, which are often transformational that might have been made by the previous leadership may often get unwound and they might choose to stick with what might have been the status quo. So while the client in this case was looking to transform and modernize the way they run their operations, including implementing a new technology platform, the decision on the part of the client in this case was to continue to maintain the status quo rather than actually go ahead with -- despite the fact that they were at a fairly advanced stage in terms of completing the implementation itself. So it is, in some sense, a client-side decision, not a reflection of our delivery, which actually has been very strong. And one reflection of that, as I provided earlier, some commentary as well, this client actually continues to grow meaningfully with us. It's a strategic logo. We do upwards of $5 million of annual revenue. We've actually added more work with them just in the last 1 month. So we feel pretty good about our relationship despite the fact that this particular program has wound down. Specific to the INR 71 million...

INR 271 million.

Yes, the charge itself, the way to think about it is that this program was a complex program, and it required working with a set of partners in the ecosystem to deliver the outcomes that the client was looking for. As we were working towards the implementation of the same itself, there are a set of deliverables that each of these vendors had provided as part of their obligations. We are working very closely with the client to ensure that we are able to recover those obligations that those vendors committed. And since we were the single throat to choke, we are also making sure that, as we collect those amounts, we are then able to also repay our obligations to those partners itself. We feel comfortable in terms of how the interactions with the client continue. And as I provided you color earlier that we continue to expand our footprint with the client organization itself. So we feel comfortable about being able to recover the outstandings and from our vantage point, we did think it was important to be conservative and provide for this since it was an outstanding amount that was there. But at the same time, we feel good about the fact that we will be able to recover the amount itself.

Got it. Got it. And on the quarter side, the impact of this contract termination would be around 1%, 1.5% on Q1 revenue? Would that be a fair assessment?

Yes, that's about right.

Got it. Got it. And related to that, Ritesh, how should we read the maintenance of the guidance despite this hit? Do we now assume that earlier we might have come closer to maybe the top end of the guidance and now we'll probably end up at a slightly -- midpoint or below that of the guidance? Or do you believe the pipeline that we have is good enough to compensate for the kind of loss that we're facing from this contract, and numerically, we might actually be at the same point that we started the year with?

Yes. I think what you just surmised right at the end is where I will leave it at. But I think the key thing to bear in mind is we had a very strong quarter in terms of pipeline wins. This has been the best quarter that we've had in the last 4 quarters in terms of new deal wins from a pipeline standpoint. And several of these deals are actually ramping up in quick order. So we think that, that provides a strong offset for the 1% to 1.5% that we feel potentially comes off because of this particular client program winding down. And as a consequence of that, we do believe that it gives us adequate comfort and confidence to, a, reinforce the guidance, and at the same time, the current pipeline as it stands, continues to remain healthy despite the deal wins. So that gives us comfort also to going out there and supporting the guidance itself that we had earlier provided at the beginning of the year.

Got it. Got it. Just one last question from my side on this one. Should we read this as an isolated incident? Or do you think there are some challenges from the lower government payouts and other regulatory, et cetera, challenges in the Healthcare segment that this vertical is facing because of which there might be some churn, some unexpected development in the Healthcare segment going forward as well?

Vibhor, actually far from that, it's probably the contrary. The client in question that we are talking about continues to expand their footprint. So I would think of it as this is a very isolated one-off instance that ends up happening and primarily because, as I said, they had a leadership change, new leader comes in. I'll give you an example, right? All of us also -- any new leader comes into an organization, sometimes what you end up doing is you end up putting a stop on new programs that might be underway and saying, let's take stock of everything before we decide to do something. That's very natural for any new leader, any new CEO that comes into any organization. I would view it in that context rather than anything else. If anything, what should give all of you comfort is the fact that our relationship with that particular client continues to expand. By the way, the other point to also bear in mind is, if you just look at the Healthcare portfolio itself, this quarter, more than 1/3 of our deal wins have come on the healthcare side. If you take the last 5 quarters on an average, that's -- again, 1/3 of our deal wins have been on the healthcare side, which broadly corresponds to the 33-odd percent that we get in terms of revenue from healthcare itself. So I don't see anything which is a secular theme or anything, so nothing more to read from this other than an isolated one-off instance on account of a leadership change in a particular client.

The next question comes from the line of Dipesh Mehta with Emkay Global Financial Services.

Just first question is on the mortgage business. We have indicated MLM model, which we have launched. Can you give some sense about, let's say, how many clients might have adopted it? And what kind of traction you are seeing in the Mortgage Language Model so far? That is question one. If you answer, then I have 2 more questions.

Yes. So one is -- the Mortgage Language Model, I mean, it's like a small language model that is there. And I think one of the things that we've been able to address with it is it takes into account more than 200-plus scenarios that is there from a document ingestion standpoint, which I think becomes very handy as we are working with clients, particularly in an environment where interest rates continue to remain elevated. In that context, I think the smart language model has actually been a significant differentiator because a lot of our clients, particularly on the origination side, are looking to keep costs under control because volumes are not necessarily very high for them. And I think from our standpoint, this has gone to pretty much all of our clients, and we use this in the way we are able to deliver throughput to them itself. So if anything else, I think it's also a reflection of how we've been able to continue to support them as they continue to deal with the macro cycles itself.