In This Article:
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Revenue: $419 million in Q3 FY25, 0.2% sequential growth, 4.6% YoY growth in constant currency.
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Direct Revenue: Increased 5.2% sequentially and 5.1% YoY in constant currency.
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EBIT Margin: Stable at 15.3%.
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Operating Profit: Grew 0.2% sequentially and 9.7% YoY.
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EPS: INR 22.6, 1% sequential growth, 14.1% YoY growth.
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Operating Cash Flow: $55 million, 110% of net income.
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DSO: 72 days, improved by one day sequentially.
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TCV Closure: $351 million for Q3, highest in the past six quarters.
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BFS Pipeline Growth: Up 58% YoY.
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Non-BFS Pipeline Growth: Up 44% YoY.
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Large Deals Pipeline: Up 49% sequentially.
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BFS Revenue Growth: Up 1.6% sequentially, 8.6% YoY.
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TMT Revenue Growth: Up 2.9% sequentially, 15.7% YoY in direct.
Release Date: January 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Mphasis Ltd (BOM:526299) reported a Total Contract Value (TCV) closure of $351 million for Q3 FY25, marking the highest in the past six quarters.
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The company has seen a significant increase in its pipeline, with BFS pipeline up 58% year-on-year and non-BFS pipeline up 44% year-on-year.
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Mphasis Ltd (BOM:526299) has successfully implemented AI platforms like NeoZeta and NeoCrux, resulting in productivity gains of 30% to 60% across different phases of the SDLC.
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The company has closed an additional $100 million deal in the BFS vertical in January 2025, which will reflect in Q4 FY25 TCV wins.
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Mphasis Ltd (BOM:526299) inaugurated a Cyber Fusion Center in Bangalore, enhancing cybersecurity solutions for global clients and improving efficiency in responding to cyber threats by over 50%.
Negative Points
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The EMEA region experienced a sequential decline of 5% in constant currency terms, primarily due to seasonality impacts.
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The logistics and transportation vertical showed a sharp decline, contrasting with growth in other verticals.
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There is a concern about the impact of AI-led productivity benefits potentially being passed on to clients, which could affect margins.
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Utilization rates have been stable at around 74% to 75%, indicating limited room for further improvement in this area.
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The new-gen TCV percentage fell below 50% this quarter, the lowest seen in recent times, indicating potential challenges in tech-led deal constructs.
Q & A Highlights
Q: What gives Mphasis the confidence to remain above industry average growth for FY25, and are there any concerns about potential leakages? A: Nitin Rakesh, CEO, explained that Mphasis expects Q4 to be the best quarter in the last three years from a sequential growth perspective. The company is focused on converting pipeline to TCV and TCV to revenue, with a six-quarter high in TCV this quarter. They have already signed a large deal in Q4, which boosts in-quarter revenue conversion. The portfolio is stable, and they are comfortable with their position for the remainder of the year.