Hexaware Technologies Limited (HEXT) Earnings Call Transcript & Summary

Ladies and gentlemen, good day. Welcome to Hexaware Technologies Limited conference call for the Q3 CY '26 earnings call. We will begin today's session with a presentation from the Hexaware management team, followed by a Q&A segment. [Operator Instructions] I will now hand the conference over to Mr. Ajay Joshi, Head of Investor Relations. Thank you. Over to you, Mr. Ajay.

Thank you. Hello, everyone. Welcome to Hexaware Technologies Q3 CY '26 Earnings Call. On the call today, we have with us our CEO, Mr. Vivek Jetley; and our CFO, Mr. Vikash Jain. In the course of this call, we may make certain statements which are forward-looking and may involve a number of risks and uncertainties. All forward-looking statements made herein are based on information presently available to the management and the company does not undertake to update any forward-looking statements that may be made in the course of this call. In this regard, there is a full disclosure which has been included in the investor presentation and the press release. We consider that as read. With this, I hand over the call to Vivek. Over to you, Vivek.

Thank you, Ajay, and good morning, everyone. Thank you for joining us. It's the privilege for me to be speaking with you today on my first earnings call as the CEO of Hexaware. Before I proceed, I wanted to acknowledge Keech and the extraordinary contribution that he has made to Hexaware. For the last 12 years, he has led this business through significant changes and has grown our revenue fall forward. That is a substantial achievement. As legacy goes beyond numbers, it is in the client relationships, the capabilities and in Hexaware's culture. He leaves a very strong foundation for us and a great base for us to build upon. On a personal note, I am grateful for his generosity, for his openness and team insight. I have benefited immensely from his support through this transition, and I'm glad that we will continue to benefit from his experience and counsel as a senior adviser. I also wanted to acknowledge the broader Hexaware team. What stood out for me through this transition is their commitment to our clients and to the work that we do every day. Client centricity is core to our DNA, and I want us to carry that commitment forward with clear priorities, accountability and a relentless focus on delivery. Now many of you are hearing from me for the first time. So I'll start with a little bit about me. What brought me to Hexaware and how I see the opportunity in front of us. I will then turn to the quarter before handing it over to Vikash for our financials. I've spent about 25 years working at the intersection of data, AI and enterprise transformation. Most recently, I was [indiscernible] where I was the President of Insurance, Healthcare and Life Sciences businesses. Before that, I led [ EXL's ] analytics business, where we built and scaled an industry-leading advanced analytics, AI services and data engineering capabilities. Over that time, I have seen several technology cycles up close. Data becoming strategic, cloud reshaping and enterprise technology and more recently, the AI adoption super cycle. Each ship created real opportunity and each one needed new capabilities, fresh thinking and the willingness to disrupt and build a new. We are now at the most pivotal moment with enterprise adoption of AI and the massive opportunity that it represents. So why Hexaware? Why Hexaware at this moment? Because the ideal partner for AI adoption requires a combination of technology, data, AI and business specialization that can be leveraged in a flexible and a fast manner. AI is democratizing technology, models, tools and core are increasingly available to everyone. But the ability to deploy to scale, to go on and to produce business outcomes, that is still very scarce. AI can change the way companies operate and change how an insurer underwrites risk, how our bank services its customers and how our health care provider ensures healthier patient outcomes. The services companies that will win the AI mandate will need to combine technology, data and AI skills with deep business knowledge and the ability to execute. And that combination is a combination that Hexaware provides, along with the scale, our deep roots in key verticals, technology vertical that is growing really rapidly, clients that have trusted us for decades and a fast-moving culture. I came on board because I believe that Hexaware has the ingredients to help define the next cycle, and I want to be a part of building that. Now at Hexaware, our AI strategy is built on 3 pillars. You heard a little bit about that on our AID, and I wanted to reiterate that. Our first pillar is AI for IT. We are embedding AI across the technology life cycle. Earlier in this year, we launched Zero Friction enterprise to help clients who modernize their legacy systems, reduce technical debt, improved software quality, strengthen the cyber resilience, automate operations and overall accelerated application delivery. Offerings such as tech debt -- Zero tech debt, Zero vulnerability, Zero backlog, Zero defects and Zero tickets, help clients move forward towards a Zero friction technology environment. Zero License, which is a part of our Zero friction enterprise, helps enterprises move from managed subscriptions to own the assets and to gain traction. Since its launch earlier this year, 8 customers have already moved workloads to our native or cloud-native environment, saving them millions in terms of workload costs. And we are seeing a lot of interest, which is kind of expanding our pipeline for these offerings. Just as an example, recently, we helped a leading secondary mortgage enterprise, replace its local no-code workflow platform with a cloud-native solution. It helped them save more than $10 million in license costs. Now AI is only as effective as the context that it understands. So at the heart of Zero Friction enterprise is Zero [indiscernible], our enterprise AI platform and a first-of-its-kind approach to enterprise technology intelligence. It connects the context, the relationships and dependencies across an enterprise technology landscape revealing our systems interact where risks and inefficiencies exist and where transformation can deliver the greatest value. This is something that's going to be one of our big feature offerings going forward. The second pillar for us is AI business. This is where I believe the greatest value will ultimately emerge. The opportunity goes beyond incremental efficiency. It's about really reimagining how businesses are run. This requires business knowledge, a clear understanding of the end-to-end workflow, the economics and the clients' desired outcome. As adoption grows, we see significant opportunities to embed AI in core business operations, driving faster growth, better customer outcomes and stronger competitive differentiations. Two recent projects illustrate our work. Work number one, we're helping a bank that specializes in cross-border payments use [indiscernible] and autonomous AI agents to replace the static and rule-based routing. And we're replacing that with clear time orchestrated global commerce. Effectively, we are building out the agentic infrastructure and the agents for individual outcomes with them. Second, we're helping a semiconductor company deploying AI agents from root cause analysis and government digital employees in high-tech factory operations, reducing mean time for resolution for them by about 90-plus percent. These examples are just a couple of the examples that we're working on and the AI for business arena, and we hope to do a lot more of these as we go forward. The third pillar for us is AI Foundation. This is about helping enterprises build the capabilities to accelerate AI adoption for them. And more importantly, for them to realize a return on that investment. We help them build trusted AI outcomes by helping them prepare their enterprise data, establish strong security, compliance and governance through our harvest, and we build and manage their AI infrastructure. Supported by our growing cardinal certified FTEs, these services help clients deploy and scale AI seamlessly. As an example, we are helping a frontier model provider expand their AI model into global markets by helping them with pretraining validation and reinforcement learning from human feedback. And in this particular case, we are doing that across multiple global languages and dialects. Our expanded partnership with Anthropic, which we announced earlier in this quarter, is another concrete step in our shift towards data and AI. As a preferred partner in the cloud partner network, one of only a handful of India-based tech services partners we will power our platforms with Anthropic's models, gain early visibility to their road map and start-up kits and access their new capabilities. Our FTE team, which includes a large anthropic-certified pool will focus on cloud deployment services. We're also establishing an Anthropic unit to deepen the strategic plan engagement, which will help our clients define and execute their AI priorities. Already about 1,200 Hexawarians are Anthropic certified. We remain on track to meet our previously stated goal of 250 FTEs and 1,000 AI architects by the middle of next year. Now the strength of these offerings is reflected in certain recent industry recognitions. Gartner positioned Hexaware as a visionary in custom software development services, while ISG named us a leader in AI powered business transformation with AWS. This recognition is an encouraging validation of the capabilities that we have already built. Now let me turn to Q3. And I wanted to just start off with some of the numbers. Revenue for the quarter was $412 million, it was up 1.6% sequentially. This was below our expectations and it reflects the softness in one of our GSE clients and slower-than-anticipated progress in selected large deals. Overall, our performance was encouraging with a lot of our verticals actually growing sequentially. Growth was led by banking and by TPP, our Technology Products and Platforms business. On a geo basis, Europe and APAC are big drivers of our growth. And our adjusted EBIT margin was about 13.8%, excluding one-off costs related to the restructuring of our Netherlands operations. Vikash will take you through the financials in detail. As I step into the role, my priority is to develop a clear assessment of our client commitments the quality of our pipeline and the assumptions that underpin our growth expectations. I'm also going to review our sales to revenue realization process and forecasting. Now as we transition into the role and as I'm starting off this quarter, we will not be providing an outlook for the current quarter, Q4 CY '26. We will ensure that our team and I can confidently stand behind our next outlook and that our process improves both the rigor and the accuracy of our forecast. I recognize the importance of visibility and consistency for our stakeholders. When we report our full year results, I will share our priorities for the year ahead and the key assumptions behind it. My objective is straightforward. It is to set clear expectations and build confidence through consistent performance against those expectations. Now over the next 90 days, I will focus on 3 priorities: number one, I will spend time with our strategic clients to understand where the business is heading, how their priorities are changing and where they need more from Hexaware. These conversations will help us identify where we earn the right set to do more and where we need to improve. Two are people and execution. I want to understand what our best teams do exceptionally well and how we can make that standard across the business. That means consistent high-quality delivery, faster decisions, and effectively removing the obstacles that get in the way of serving clients. Our team is central to the value we deliver and investing in the team is fundamental to the business we want to build. Third, our capabilities and investment choices. We will assess where deeper industry expertise, differentiated solutions and AI-led offerings can create the greatest value for clients. We will continue to invest in talent, platforms and partnerships with a clear line of sight from investment to client adoption and commercial results. I will share our strategic plan once that assessment is complete. We will set out where we intend to compete, the choices we are making and how we will measure our progress. Our ambition is to accelerate growth, and our focus will be on growing our business and strengthening our execution. What you should expect from us is clarity on our priorities, the discipline in terms of our commitments and tender about the performance, including where we fall short and what we are doing about it. We will set clear expectations, report transparently on our progress and hold ourselves accountable for that delivery. Before I close, let me return to why I joined Hexaware. I believe in this business, in our people and what we can build together. My focus now is on working with our team to realize that potential and to convert it into sustained performance. With that, let me hand it over to Vikash to take you through the financials. Vikash, over to you.

Thanks, Vivek, and welcome to Hexaware. Day 1 for you. Good morning, everyone. I'll take you through our financial performance for the quarter, the movement across our business segments and the key operating and cash flow metrics. On the deal wins, let me add some color to the deal wins in addition to what Vivek highlighted about too. The wins in the current quarter span across legacy modernization, data modernization, enterprise applications, customer experience and regulated industry transformation. Now what the portfolio reflects is a healthy mix of existing client expansion and new logos across industries and geos. In TPP vertical, we have been selected by a smart home and property technology platform to deliver AI-native customer experience that will help improve revenue and operations for the end client. The commercial model is a reflection of what we are moving towards, which is completely outcome-based pricing. At an leading ANZ Bank, which is from our Asia Pacific region banking vertical stable. We are delivering on our Zero License offering, saving the client millions of dollars in license cost every year. In a global pharmaceutical player, we are delivering on AI application and agentic development. In this client, in addition to the current deal, we are pursuing a separate large IT cost optimization opportunity. In the manufacturing vertical, we have been selected by a global data storage company to build on an Agentic AI factory. In a U.K. utility company, our engagement focuses on modernizing legacy applications using power apps and digitizing the regulatory and operational processes. So the bottom line is, as you see, we are seeing AI getting embedded into application development, modernization, data platform, customer operations and helping us gain market share both in existing clients and opening up new logos across the geos. In terms of our financial performance, revenue for the quarter came in at USD 411.9 million, this represented a sequential growth of 1.6 percentage and year-on-year growth of 4.3%. In constant currency terms, revenue grew 1.7% sequentially and 4.5 percentage year-on-year. In rupee terms, revenue was INR 39,331 million, up 2.3% sequentially and 12.9% year-on-year. In dollar terms, the sequential growth of $7 million in revenue was driven by a combination of volume, better seasonality, partially offset by lower license revenues. On margins, reported EBIT for the quarter was at 12.2%. This quarter included 160 bps of items that we have adjusted for resulting in an adjusted EBIT margin of 13.8%. On an adjusted basis, margins improved by 17 bps sequentially. The sequential improvement was supported by calendar and foreign exchange. This was partly offset by continued investments in capabilities and growth as well as increase in onshore revenue mix. The reported PAT was at 10.9%, while the adjusted PAT was lower than the reported PAT of 10.9% at 9.4%. Now let me explain the onetimers in the current quarter. First is towards the acquisitions. On structuring M&As, we designed the notes in a way that we pay for performance. Now when acquired businesses deliver as was with the large majority of the SMC earnout, we paid. When targets aren't met, the contingent payment is reversed and the customer intangibles are amortized. Now this quarter is a good example of the mechanism, which is working on both ways, and you'll see that. We recognized a 530 bps earn-out reversal on SMC, while the performance of [indiscernible] led to an additional 110 bps or no charge. In other words, where performance supports a higher payout, we recognize additional cost and with our targets are not achieved, the liabilities reversed. The net impact was 420 bps credit in other income partly offset by 140 bps of intangible amortization. Second is the leadership transition. This quarter, we saw a leadership transition at a CEO level. That had a net impact of 20 bps in the P&L, and that's a one-time charge. Third, as part of aligning our cost structure with the needs of the business, we have restructured our Netherlands operations during the quarter. Now there is a one-off cost of close to $6 million, and we expect it to improve that -- which we took in the quarter, and this charge is -- the restructuring is expected to improve the profitability of our business on a go-forward basis. The restructuring cost includes the onetime severance, legal and the lease closure effects and had an impact of 150 bps at PBT level. On a go-forward basis, we expect this to improve our annual operating margins by [indiscernible] 40 bps every year. EBIT level, only has impact of amortization of intangibles and leadership transition, while at a PAT level, there are impacts associated with the EBIT level plus impact of restructuring of Netherlands entity, reversal of acquisition earn outs and the related tax effects. From a margin perspective, YTD Q3, our EBIT margins have been 13.6%. Now Q4, we know is a seasonally weak quarter for our margins. Next quarter, margins would have headwinds from seasonality and merit increase, partially offset by tailwinds from better realization and operational improvements, including the uplift from the Netherlands entity closure that I spoke about earlier. We announced our merit increases yesterday to the organization and the merit increases are going to be effective 1st of October. This is one of the first decisions Vivek made immediately after joining here. The merit increase impact is close to 100 bps. For CY '26, we continue to expect our adjusted EBIT margins to be within communicated range we had given earlier. However, given 1 quarter left, we are narrowing the full year margin range to be in the range of [ 13 to 13.5 ]. A bit of a color on the units. Year-on-year growth was broad-based with 6 of the 7 verticals delivering year-on-year growth. Banking, TPP, peers Healthcare and Insurance delivered healthy year-on-year growth. On sequential prices, growth was led by FS Banking and TPP. Financial Services grew 3% sequentially and 2.4% year-on-year. Now within this vertical, one GSE client is gaining traction following a vendor consolidation exercise that we completed in the current year. The other GSE client, where we had benefited from consolidation last year is now going through a cost optimization exercise. Now we continue to maintain market share and not losing it to any competitor. However, there is a headwind coming in from the cost optimization exercise that the client is undertaking. This affected Q3 and will continue to have an impact in Q4. Absorbing this headwind, we expect financial services to grow for the full year, though it won't be below the company average. Healthcare and Insurance declined [ 40 ] bps sequentially, but grew 6.3 percentage year-on-year. The sequential softness was mainly due to lower asset revenue offset by volume and calendar benefits. The underlying business remains very healthy, supported by ramp-ups in broad-based growth in our Europe portfolio. Healthcare and insurance will be one of the strongest year-on-year growth driver for the company on a full year basis. Manufacturing and Consumer deal closes, as we have called out earlier, have started converting into revenues and the vertical grew 1.8% sequentially and 3 percentage year-on-year. Growth was broad-based across accounts, subsectors and geos with contribution from both existing clients and new logos. This is the fifth quarter of year-on-year growth for M&C, continuous year-on-year growth. Professional Services was broadly stable sequentially and grew a 7.8 percentage year-on-year. Now the sequential performance reflects normal seasonality and after a stronger prior quarter for the largest client in this vertical. You would recall that the largest client in this vertical follows a fiscal year, which is from July to June. So Q2 for us, which is April to June, turns out to be very strong for this vertical. Banking delivered another strong quarter, growing 6.6% sequentially and 13.5% year-on-year. Growth has been secular for the last few quarters, and we expect the vertical to have a strong full year. Year-on-year growth is faster than the company average and has contributed from all the 3 geographies. Travel and Transportation declined 3.5% sequentially and 8.5 percentage year-on-year, reflecting softness in the end-to-end demand and the ongoing conflict in Middle East. We expect this vertical to remain soft for the full year. TPP grew 7.2% sequentially and 9.7% year-on-year. This vertical, which we began reporting separately this year is showing good traction, though on a smaller base. By geos, Americas grew 1.5% sequentially and 1.1% year-on-year. Performance, as I called out earlier, is affected by the softness in one of the GSE clients and a high watermark base that included a large asset transactions in the [indiscernible] vertical. The year-on-year growth is led by professional services and banking. Adjusted for the large asset deal, North America has been material and significantly outpaces the region and company average. FS, which is the largest vertical in Americas has been growing slower on the back of GSE line, which we spoke about. Europe, grew 3.1% sequentially and 12.8 percentage year-on-year, supported by account ramp-ups, both in existing clients and new logos. Europe's year-on-year growth is broad-based across the verticals. [indiscernible] which is the largest vertical in Europe, has been the primary driver of growth on the back of continuing wins across new clients and wallet share gains in existing clients. Asia Pacific, delivered healthy year-on-year growth at 20 percentage. Vertical growth is broad-based with FS Banking and [indiscernible] driving growth. As I called out earlier, GTT has seen a material softness in APAC due to the ongoing macro situations in Middle East. On the client metrics, our client portfolio continues to broaden. We now have 32 clients with annual revenues greater than $10 million compared to [ $30 million ] a year ago. The number of clients above $20 million increased to $17 million from $15 million. Turning to our operating metrics. The total headcount closed at [ INR 35,887 ], a net addition of [indiscernible] during the quarter. IT addition was [ 386 ]. The larger addition was in BPS, which was towards fulfilling seasonal demand in Q3 and Q4. Our onshore mix increased to 53.1%. This reflects the impact of the rebase lead engagements and the mix of recent France. We will continue to manage delivering mix as these programs mature. Voluntary attrition in IT remained stable at 11.1%. Utilization was 84.9%, broadly unchanged sequentially and healthy by the historical standards. We expect utilization to remain range bound as we balance delivery efficiency with capacity for future growth. Our closing cash and investment balance was close to $200 million, an increase of $23 million sequentially, mainly driven by operating cash generations and we continue to be debt free. DSO came in at 77 days, one of the best in the industry compared to 78 days in the prior quarter. We again expect DSO to remain range by the year-end. Cash conversion continues to remain strong. The last 12 months operating cash flow is close to 110 percentage of reported profit. Effective tax rate for the quarter came in lower at 21%. The lower rate is because of the earn-out reversals, which is not taxable partly offset by the write-off of deferred tax assets associated with the Netherlands restructuring. Our normalized full year effective tax rate expectations remains between [ '25 to '26 ]. EPS for the quarter was 7.06%, up 30.7% sequentially and 16.1% year-on-year. The sequential increase was supported by the earnout reversal, which increased reported PAT relative to the registered PAT. This quarter, also included approximately $3 million of hedge and translation losses. Based on the current hedge book and September end exchange rates, we estimate losses of approximately $4 million and $3 million over the next 2 quarters, respectively. To summarize, Q3 delivered sequential revenue growth, a modest improvement in adjusted EBIT margins, healthy operating metrics and strong cash condition. Growth was led by Banking and TPP, while the principal headwinds came from the GSE client, Travel and Transportation and lower asset revenue. We remain focused on the disciplined execution, protecting margins while continuing to invest in the capabilities required for growth. With that, we will open the call for questions.

[Operator Instructions] Your first question comes from Anmol Garg.

Yes. I had a couple of things that I wanted to understand. Firstly, my congratulations on the new role. I wanted to understand from you as your strategy going ahead, do you wish to add or double down on any service lines or any particular verticals that you may see traction right now in the market as well as do you want to change something in the sales team, particularly on the incentive side of things?

Yes. So first of all, thank you, Anmol. And look forward to meeting you in person sometime soon. So what we are going to do over the next 90 days is actually do a full review of our strategy. Now this is going to include thinking through where in the areas that we want to double down in. So where do we want to play. It's going to include a review of [indiscernible] that we want to compete with. So what do we do. And then also an aspect of how do we make that happen, both in terms of sales. So what do we do with large deals, what are we doing with the go-to-market and then also in terms of delivery, which is how do we bring more focus into the delivery. And finally, we're going to look at our investments and take a look at which are the areas we want to invest in where we want to grow. So the sum total of all of that is going to basically be our strategy plan, which we will hopefully bring back to you the next time that we meet. And from that point on, as I said earlier, we have set out the road map and the expectations, and you'll see us kind of followed through against the execution on that and what should give you line of sight to certain metrics around the execution. So look, I mean, this is day 1 for me, but that's essentially the plan that we've put together over the next weeks and a couple of months and then come back and show you that.

Understood.

Just to add to that on the second part of your question with respect to the sales incentive plan. If you recall on our [indiscernible] presented that were recently we transitioned for our hunting team from a quota-based plant to a commission-based plan. And that's something which we expect is going to occur with. But as Vivek mentioned, I think everything is going to be reviewed with a lens of what is it, which can help us in terms of increasing the velocity of the deals, both from a demand generation and from a demand catch-up perspective. But I just wanted to call out that, hey, there's something we recently changed in the current year from a sales incentive perspective.

Understood. My second question is on the guidance. So I know we haven't given guidance this time, but last time, our guidance was around 6% to 7%. So now after 1.7% growth in this quarter, to achieve the guidance, the ask rate required for the fourth quarter remains quite high in the range of 4% to 5%. So do you see any sort of traction in fourth quarter this time? And what would lead to meeting our guidance?

So as Vivek mentioned in his opening remarks, revenue for the quarter was below our expectations, and that reflected the softness in one of our GSE clients and slower-than-anticipated progress in some of the large deals. Now these ones continuing to have continuing impact even in Q4. So while we are not sharing a specific number for the quarter, what I would like to call out is we expect Q4 to follow the seasonal pattern you have seen from us in the previous years. And in the previous years, Q4 is basically has the usual effect of furloughs and fewer working days leading to a sequential decline. So I just wanted to reiterate that, hey, we are not giving specific guidance per se, but what we are calling out is expected to have the same seasonal pattern what you have seen from us in the previous years.

Understood. Understood. I had one more question. So we had liquidated [indiscernible] equity in Netherlands this quarter. So any kind of revenue impact in the coming quarters Vikash that you can sort of indicate over there?

No. So I mean, I want to reiterate one thing that [ Mobiquity ] for us has worked out to be a great acquisition in terms of building our capability from a product development perspective and give this acquisition back in 2019. No Netherlands operations came in around with that. A lot of the customers have what COVID taught and this acquisition we did for COVID. What COVID enables the customers to see is a lot of the work which was getting done from an on-site perspective, similar quality of work can be done from an offshore perspective at a much reduced price point. So the clients actually transitioned a lot of the work to our India operations and other offshore locations or low-cost locations. So from a revenue perspective, it has a marginal impact. Being a complex labor law country, while the revenue declined, we could not optimize in terms of our costs in line with the revenue. And hence, we had to make this decision in terms of restructuring our operations. So long answer to your question, but the short one answer for that is we don't see a material impact in terms of revenues because the revenues were already transition to offshore locations.

Your next question will come from Gaurav Rateria with Morgan Stanley.

Thanks for giving us this opportunity. Many congratulations, Vivek on your exciting new role. My question is with respect to the business momentum that we had built over the last several quarters, which was supposed to help us exit this year with a very strong rate and give us momentum for the next year. Now I understand that we are in the middle of this transition that is taking place. But if I were to break down the entire outlook into 2 parts, which is one part is the existing momentum in the business that we had built over the last several quarters, along with the macro, along with client specific things that are going on versus the transition that we have seen in the senior management team and because of those transitions some things kind of getting here and there in terms of the plans. So I just want to understand that I agree with the transition part. I understand that it will come back in 90 days and come out with a refresh on the strategy. And I totally support on that. But what about the existing momentum in the business that we had built, how do you think about that?

Sure. Sure, Gaurav. So I can take a stab at this, and then I think Vikash will also pitch in with some specifics. So I want to be clear -- absolutely clear about one thing, which is as far as the company is concerned, as far as Hexaware and the employees, there has been no slacking off. There has been no kind of taking the eye off the ball in terms of business. The kind of motion that we had under each and the kind of cadence that we had in terms of chasing after clients. That state through in this transition period, and you will actually see that stay through consistently over the next few months. So there's not really been any impact whatsoever in terms of the company. Now the momentum that you're talking about, it actually still exists. When we look at our pipeline, all those opportunities are still there, the deals have progressed. But hasn't happened, and this is where the impact in Q3 came in was we had actually expected some of those deals to have already closed. And for various reasons and client reasons in certain cases, longer decision cycles some of those deals have not closed at the same rate at which we expected. Now we can actually see all of those closed in Q4. We can see some of them close in Q1. The short answer is I didn't have enough information right now to be definitive about when they'll close and project that out. And that's why we're kind of stepping back and taking some time. But there has actually been no change at all in the underlying business momentum. When we see our pipeline, when we see the deals in the pipeline, it's all looking very, very strong. I want to close out with one other thing on that aspect which is we talked to you earlier about a lot of these client kind of our vendor consolidation efforts where they were coming back and asking about looking at vendor consolidation for rate saves. We've actually gone back and one most of those vendor consolidation initiatives. Of all the ones that we entered in at this point in time, there's only one that is spending and only one where the result was negative for Hexaware. But everything else, Hexaware has actually come out as a winner. So I think there's also a lot of momentum that's in the business from that. And we expect to see both of those things play out. Vikash, anything to add to that?

No, very clear. You covered it well.

Your next question comes from Prateek Maheshwari with HSBC.

Thank you for the opportunity. And Vivek congratulations on the role. My first question is to just understand. So basically, if you look at the performance versus guidance for the company, it has made a few times over the last few quarters, right? And so as an early check, I just wanted to check from Vivek, what do you think preliminary, I know what do you think should change, right? Is there a requirement for a process change, a stricter view of pipeline and conversion? Or do you think that things have been just unlucky also with the GSE client and the Professional Services clients for Hexaware?

Look, this is a tough question for me to answer, Prateek, because I'm still like day 1, I don't have enough data points to tell you or a root cause analysis for saying what happened, what didn't happen. I can tell you about Q3, and Q3 is really specific to those 2 factors. One is a slowdown in one of the GSE's. And then the other aspect is like a delay in some of those deal closures. But I'll step back and tell you a little bit about at least my philosophy in terms of how do we want to do the forecasting. We -- as I've said in my remarks earlier, there's going to be a very, very strong focus from me and from the management team in making sure that we set these commitments and then we make our utmost effort to actually beat and to exceed them. So I'm going to be looking at the process. I'm going to be looking at the inputs into the process, the timing of when it comes in, the quality of the information and there's going to be a really, really high degree of effort in making sure that we kind of keep coming in, meeting and beating our commitments and keep kind of raising that cadence as we go along. So you should hope to see that from us as we go forward. And that's something that I will -- I have signed a huge amount of vantage to that and a huge amount of focus in building up that credibility.

Right. And maybe second question is on where the financials are today for Hexaware. I see there's enough opportunities to kind of improve both the growth rate for the company and also the margins, right? But from your perspective, where would you look at things from a near to midterm basis, like what would you want to kind of [indiscernible] the growth further or simultaneously would you try for expanding the margins as well?

So our long-term ambition for the business is actually to make sure that we provide sustainable, high-quality -- high-quality growth rate over a period of time. Now what that means is that we actually will have to focus on and will focus both on increasing our revenue growth rate and improving the profitability and the margin that comes with it. So it's not an either or it's going to be both. In terms of the mechanics of it, in the short term, does that mean more focus on the deal closure to get up the growth rate and then use that extra growth rate and the wins to then focus on margin? Or does it mean focusing on both of them at the same point in time. That's actually one of those strategy questions that we'll come back to you and talk to you about later. But long term, the focus is going to be on both. It's not either or it's an add.