WNS (Holdings) Limited

Good morning and welcome to the WNS Holdings Fiscal 2025 4th Quarter and Full Year Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, we will conduct a -and-answer session. Instructions for how to ask a question will follow at that time. As a reminder, this call is being recorded for replay purposes. Now I would like to turn the call over to David Mackey, WNS's Executive Vice President of Finance and Head of Investor Relations. David?

Thank you and welcome to our Fiscal 2025 4th Quarter and Full Year Earnings Call. With me today on the call, I have WNS's CEO, Kesha Muragesh, and WNS's CFO, R.H. Jitsen. Press release detailing our financial results was issued earlier today. This release is also available on the Investor Relations section of our website at .wns.com. Today's remarks will focus on the results for the Fiscal 4th Quarter and Full Year ended March 31, 2025. Some of the matters that will be discussed on today's call are forward-looking. Please keep in mind that these forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, those factors set forth in the company's Form 20-F. This document is also available on the company website. During this call, management will reference certain non-GAAP financial measures which we believe provide useful information for investors. Reconciliations of these non-GAAP financial measures to GAAP results can be found in the press release issued earlier today. Some of the non-GAAP financial measures management will discuss are defined as follows. Net revenue is defined as revenue-less repair payments. Adjusted operating margin is defined as operating margin excluding amortization of intangible assets, share-based compensation, acquisition-related expenses or benefits, and impairment of goodwill and intangible assets. We are also excluding costs related to our ADS program termination and costs associated with the transition to voluntarily reporting on U.S. domestic issue reports. Adjusted net income, or ANI, is defined as profit excluding amortization of intangible assets, share-based compensation, acquisition-related expenses or benefits, goodwill and intangible asset impairment, ADS program termination costs, the transition to voluntarily reporting on U.S. domestic issue reports, and all associated taxes. These terms will be used throughout today's call. I would now like to turn the call over to WNS'

CEO, Geishat Muragesh. Geishat. Hey, thank you, David. Good morning, everyone. I'm delighted with this quarter's results. In the fiscal fourth quarter, WNS' financial results were highlighted by solid sequential revenue growth, operating margin expansion, and strong free cash flow. The company posted net revenue of $323.3 million, representing a sequential increase of .3% on a reported basis and .6% on a constant currency basis. During the quarter, healthy demand for digitally led business transformation and cost reduction initiatives more than offset the impact of unfavorable currency movements. In Q4, WNS added nine new logos and expanded 50 existing relationships. In addition, we are excited to report that during the quarter, the company closed two large transformational deals, one each in the banking and financial services area, as well as another in the travel vertical. We expect these engagements to begin generating revenue in the first half of fiscal 2026. On March 11th, we announced the acquisition of Kipee.ai, a leading provider of data management services focused on the Snowflake platform. Kipee brings to WNS strategy, execution, and managed service capabilities across data engineering, advanced analytics, AI, as well as data science. Their more than 600 global employees represent one of the world's largest Snowflake-certified talent pools and will significantly enhance WNS's positioning in the rapidly growing and mission-critical data management space. Kipee has built more than 250 accelerators, enablers, and solutions that allow clients to quickly leverage their data to improve decision-making and drive business outcomes at scale. Their capabilities are highly complementary to WNS's existing offerings, and we believe Kipee's seasoned leadership team, talented resources, and strong delivery approach represent an excellent cultural fit for us. Together, we will combine domain, digital, data, and AI to create new services and solutions, add new clients, and expand the scope of our existing relationships. During WNS's 25-plus year history, the company has developed intimate knowledge of industry-specific operations, processes, workflows, and systems. This foundational business understanding is at the core of everything we do and puts WNS in a unique position to help clients harness and analyze data and leverage -the-art technologies, including AI, generative AI, and agent-like AI. Our organic and inorganic investments over the past several years have been focused on strengthening and combining our capabilities across these three pillars for long-term success. Just under a year ago, we hired a Chief Business Officer to oversee WNS Next, our umbrella organization covering AI, data and analytics, and technology and automation. We've also now added a new Chief AI Research Officer, a Chief Product and Design Officer, and an EVP of digital strategy. These experts are leading their respective teams and helping WNS navigate the rapidly evolving technology and services landscape. In addition, our Tuck-in M&A strategy has increased the breadth and depth of our technology and AI-led capabilities with the acquisitions of Guram, the SmartCube, OptiBy, and now Kipi.AI. Together, these investments are helping us accelerate the creation and deployment of WNS proprietary technology assets, including products, platforms, tools, enablers, and accelerators that are reusable and customizable. These digital assets, which now embed AI, GenAI, and agent-like AI, are being combined with WNS' global talent to deliver productized services for our clients. By creating solutions at the intersection of domain expertise, data, and technology, WNS is now able to understand industry problems well, create transformational AI-led solutions, and deliver differentiated outcomes. I would now like to provide you with a brief recap of the past year before turning our attention to Fiscal 2026. From a financial perspective, Fiscal 2025 was a challenging year for WNS, driven by customer-specific revenue headwinds, including a large healthcare client loss, the delivery transition from on-site to offshore for an Internet-based procurement relationship, and volume-based ramp-downs in the online travel space. Full-year net revenue came in at ,000,000, down .5% on a reported basis, and that's down .7% on a constant currency basis. The revenue decline resulted in lower expense coverage, which adversely impacted our adjusted operating margin. Despite this pressure, WNS continued to invest in accelerating capabilities and building organizational depth, including a 16% increase in our sales force during the fiscal year. From a profitability standpoint, WNS was able to offset the revenue and margin pressure with non-recurring benefits from the reversal of a tax liability in the second quarter and the sale of a facility in India in the fourth quarter. Together, these two items contributed approximately $21 million to adjusted net income and $0.46 to adjusted EPS. In fiscal 2025, WNS generated strong free cash flow and deployed our capital in a balanced, disciplined manner, including aggressive share repurchases, capability-based tuck-in M&A, and scheduled debt repayments. Other highlights from this past year include our transition from IFRS to US GAAP reporting and WNS's inclusion in the Russell 2000 as well as the MSCI US Small Cap Indices, which help improve access to capital, trading liquidity, and company visibility. As we enter fiscal 2026, we are excited about the company's solid business momentum, healthy pipeline, differentiated capabilities, and expanding market opportunities. In fiscal 2025, we added 33 new logos and expanded 179 existing relationships, representing healthy increases over the previous year. We also completed our acquisition of KIPI in the high-growth data management space, and we have closed two large deals in the fourth quarter alone. WNS has now posted two consecutive quarters of sequential top-line growth, and the three customer-specific revenue headwinds mentioned earlier are now largely behind us. To date, demand for services that deliver business transformation and cost reduction remains stable and healthy despite the volatile macro environment. Our pipeline is broad-based across verticals of services and maintains a healthy balance between traditional deals and large transformational opportunities. Clients continue to move forward with decisions as evidenced by our recent large deal signings and now the new logo additions as well. And while we must be vigilant for potential changes in client behavior in the coming months as well as quarters, we are encouraged by the fact that our business model remains fundamentally defensive and recurring in nature. WNS begins fiscal 2026 with 90% visibility to the midpoint of our revenue guidance, which represents 9% growth on both a reported as well as constant currency basis. The guidance midpoint for ANI assumes stable -over-year adjusted operating margins despite increased investments and growth in adjusted EPS of more than 11%, excluding one-time benefits in fiscal 25. In summary, by using our industry-focused operational knowledge to unlock the power of data and -the-art technologies like AI, Gen.AI, and Agentic AI, WNS is well positioned to meet our clients' rapidly evolving requirements, deliver impactful business outcomes, and drive long-term sustainable shareholder value. I would now like to turn the call over to our CFO, Arunjit Sen, to discuss further our results as well as outlook. Arunjit? Thank you, Keshav. In the fiscal fourth quarter, WNS's net revenue came in at $323.3 million, down .8% on a reported basis from $325.9 million last year and up .1% on a constant currency basis. -over-year, revenue was adversely impacted by a loss of a large healthcare client in Q2 of 2025, reductions in travel volumes, and unfavorable currency movements. Sequentially, net revenue increased by .3% on a reported basis and .6% constant currency. The -over-quarter revenue growth was driven by broad-based demand for AI-led transformation, automation, and cost reduction solutions, which more than offset reduced revenue with large utilities clients, resulting from the Q3 completion of a platform migration project and unfavorable currency movements. In Q4, WNS recorded $1.3 million of short-term high-margin revenue. Adjusted operating margin in Q4 was .4% as compared to .9% last year and .3% last quarter. -over-year, adjusted operating margin improvements were driven by favorable currency movements and were partially offset by increased investments in infrastructure and sales. Sequentially, margin improvement was driven by operating leverage in high volumes, improved productivity, and favorable currency movements. The company's net other -slash-expense was $16.9 billion of net income in the fourth quarter as compared to $0.8 billion of net income in Q4 of fiscal 2024 and $0.9 billion of net expense last quarter. -over-year, the favorable variance is the result of $16.7 billion from the sale of a facility in India. Sequentially, the favorable variance is the result of the facility sale, reduced interest expense driven by debt repayments, and increased interest income on higher cash balances. WNS' effective tax rate for Q4 came in at .2% as compared to .7% last year and .8% in the prior quarter. Both -over-year and sequentially, the tax rate increase was driven by changes in a geographical profit mix and the percentage of work delivered from tax-incentive facilities. The company's adjusted net income for Q4 was $66.2 billion compared with $53.9 billion in the same quarter of fiscal 2024 and $47 billion last quarter. Adjusted diluted earnings were $1.45 per share in Q4, up from $1.12 in the fourth quarter of last year and up from $1.04 last quarter. As of March 31, 2025, WNS' balances in cash and investment totaled $267.4 million and the company had .3.5 million in debt. In the fourth quarter, we generated $53.4 million of cash from operating activities, paid $63.4 billion for an acquisition of KIPI, incurred $18.6 million in capital expenditure, and made debt repayments of $33 million. DSO in the fourth quarter came in at 34 days, as compared to 33 days reported in Q4 of last year and 34 days last quarter. With respect to other key operating metrics, WNS' total headcount in the end of fourth quarter was 64,505 and our attrition rate was 39% as compared to 33% reported in Q4 of last year and 32% in the previous quarter. We expect attrition to average in the low to mid 30% range, but the rate could remain volatile quarter over quarter. Bill seed capacity at the end of Q4 was 42,494 and WNS averaged 72% work from office during the quarter. I would like to provide you with a brief financial summary for fiscal 2025 before discussing our outlook for the coming year. Net revenue for fiscal year came in at $1 billion at $266 million, down .5% on reported basis and down .7% on constant currency. Revenue growth during the year was driven by healthy new logo additions and existing client expansion that was overshadowed by the three client-specific revenue headwinds Keshav mentioned earlier. The company's fiscal 2025 adjusted operating margin was 19.5%, down 110 basis points versus fiscal 2024. Margin favoritism from currency movements and improved productivity was more than offset by increased investments and reduced operating leverage on low revenue. Net interest income expense for the year improved by $11.7 million and was driven by an India facility sale of $16.7 million before. This benefit was partially offset by reduced interest income on lower average cash balances and increased interest expense on higher average debt levels. The company's effective tax rate was .9% up from .3% last year but below normalized levels due to a $8.6 million non-recurring tax benefit in Q2. Full year adjusted net income came in at $208.7 million, down 4% year on year while adjusted EPS came in at $4.55 representing an increase of 3%. WS's average share count reduced by 7% as a result of our aggressive share repurchase in the first half of the year. Our fiscal 2025 profitability was favorably impacted by $21.0 million or $0.46 per share as a result of non-recurring benefits including a tax liability reversal in Q2 and our facility sales in India in Q4. In fiscal 2025 WS generated $207.2 million in cash flow operations, spent $54.1 million on capital expenditures, made debt repayments of $174 million and incurred $63.4 million for acquisitions. The company also repurchased 2.8 billion shares of stock at a total cost of $149.7 million or $58.46 per share. Our disciplined balanced approach to capital allocation resulted in WNS ending the year with a net cash balance of $24 million. The company's global attrition rate for the year was 35% and work from office increased to 72% as compared to 68% last year. In our press release issued earlier today WS provided our initial FOIA guidance for fiscal 2026. Based on the company's current visibility levels we expect net revenue to be in the range of $1.352 billion to $1.404 million representing year over year growth of 7% to 11% on both reported and constant currency basis. We currently have 90% visibility to the midpoint of the range which assumes an average British pound $2 exchange rate of $1.29 for the full year. Guidance includes our acquisition of Kipi.ai which is expected to contribute approximately 2% revenue and be neutral to adjusted EPS. Fiscal 2026 revenue projections assume a year over year headway of approximately 2% related to fiscal 2025 ram downs with the health get-line and online travel volumes and do not include any revenue contribution from unsigned large deals or improvements in discretionary project spending. WS's full year adjusted net income for fiscal 2026 is expected to be in the range of $199 billion to $211 billion based on an 87 rupee to a US dollar exchange. This implies adjusted EPS of $4.43 to $4.70 based on a diverted share count of approximately $44.9 billion shares. As Keshav mentioned, excluding the 49 cents of one-time benefits in fiscal 2025, the midpoint of guidance represents an increase of more than 11% in adjusted EPS. With respect to capital expenditures, WS currently expects our requirements for fiscal 2026 to be up to $65 million. We will now open the call for questions. Operator.

Ladies and gentlemen, if you wish to ask a question at this time, please press star 1-1 on your telephone and wait for your name to be announced. If your question has been answered or you wish to remove yourself from the queue, please press star 1-1 again. In the interest of time and to enable everyone on the call to participate, please limit your queries to one question and one follow-up. Please stand by while we compile the roster. Our first question comes from the line of Brian Bergen of TD Cowan. Your line is now open.

Hi, guys. Good morning, good afternoon. Thank you. I want to start on client demand. So first off, good to hear the two large deals that were signed in the fourth quarter. I know those have been a long time coming for you. But aside from those, can you just talk about just broader client sentiment, what you've been seeing around signing, engagement ramps, and spending behavior just particularly since the end of March?

Yeah, Brian, so thanks for that question. Interestingly, while there is a bit of uncertainty in the minds of a number of clients, essentially around where the macros are, what are the kind of pronouncements and announcements coming on tariff wars, as well as reactions of different countries, which could impact each of these companies' supply chains or different elements of their business. What we are seeing is a consistent theme coming to the fore, which is nobody wants to wait anymore in terms of their digital transformation kind of journeys. But more importantly, everyone is quite clear about the fact that their cost reduction and cost leadership programs must anyway happen along with it. So, you know, as you can see, we've actually been able to accelerate closures. In fact, some of the closures, we were able to finish earlier than what we had anticipated to be possible. Some of the large deals that we announced during this quarter, we originally thought would actually take a little longer to close. And the advantage of this now means that we actually get full year's revenue coming in on some of these deals, both large as well as small. So actually, what we see is enhanced activity from clients, clients being cautiously optimistic, taking calls in terms of cost reduction and, you know, digital kind of disruption. And from our perspective, as long as there is no paralysis, that offers very well for our business model for the long term.

And I think just to Keisha's point, Ryan, when you look at the roughly 90% of our business, it is transformation, automation, cost production, where we're actually managing operations for our clients. The reality is that's a strategic decision on the client's part. And if they've made that decision, that they need to find a partner to accelerate that journey, you know, the fact that we save them money at the same time is never going to be an issue in a week in fire. And certainly wouldn't go as far as to say that our business is countercyclical. But the reality is that 90% of our business is and does continue to have a very low macro correlation. Where we have to watch for potential volatility would be on the 10% of our business project based, which at this point remains fairly stable, and to see if there are any potential impacts down the road to volumes.

Okay, makes sense. That's clear. And then if we kind of dissect the 26 growth outlooks, so 7 to 11 reported in constant currency with like two points in organic, can you give us a sense just on the other puts and takes as it relates to things like productivity commitments, client rampdowns, the large yield assumption, just kind of the build up to that, you know, the kind of the gross versus net growth dynamic.

Sure. I think overall, Brian, you know, we're kind of back to a more normalized environment. So I think the headwinds that we're looking at for the year relative to client rampdowns, productivity improvements, and, you know, projects, you know, the projects that are rolling off, right, we're still looking in that 10, 11% range for that piece of the business. The other piece that Arjit called out in his prepared remarks is we do have a 2% annualized impact from the large healthcare rampdown and from the rampdown that occurs throughout the year in the OTA space. So those two items will create an additional 2% headwind in fiscal 26, but our growth algorithm in the 9% at the midpoint is inclusive of roughly 13% overall headwind

in the business. Okay.

Thank you. Thanks, Brian.

One moment for our next question. Our next question comes from the line of Mayank Tamdan of NEDEM. Your line is now open.

Thank you. Dave, maybe just to extend Brian's question there, could you talk about the cadence of growth through the fiscal 26 in terms of, you know, of the organic trends versus the M&A contribution? I think that would be pretty evenly split. And then also same question on the margin front, you know, how we should think about the cadence of margins as the year progresses.

Yeah, look, I think we're kind of back from a cadence perspective line to normal numbers, right? The reality is the acquisition took place about mid-month in March, so we should have a full quarter's worth of contribution in fiscal Q1. In terms of the cadence of the business, I think both Keshav and Arvind talked about the fact that, you know, excluding the healthcare ramp down, which was in fiscal Q2 of 25, we've now put up three quarters in a row of 3% sequential growth in the business on a house currency base. So we enter the fiscal year with good momentum. Obviously, as you're all aware, Q1 is typically seasonally soft for us on the revenue side. So, you know, because we give our productivity improvements in Q1, the expectation walking into the year similar to all, as always, is that we're going to be flat, slightly up in Q1, but it's always kind of a softer quarter because of that 3% to 4% productivity headwind that we have embedded in that. Similarly, from the margin perspective, Q1 is going to be soft for us because we give the productivity headwinds in Q1 on the revenue side. We give the wage increases on the cost side. And we're also going to have the ramp of these two large deals that are going to be hitting us in Q1 and in Q2. So our expectation at this point is that we're going to be somewhere in the 17 to .5% operating margin for Q1. But to see that number sequentially improve as we move throughout the year and as both Arvind and Keshav mentioned, looking at at this point in time with our aggressive investments, we're going to be at a flat operating margin at that .5% level for the whole year.

Yeah, and just to add, if you look at from the overall year perspective, Dave mentioned, if you look at, we are seeing margin expansion in H2. And of course, as our revenue visibility increases and we start tracking high projections, we also expect the overall margins to also improve. In a similar manner that we told you this year when we had this year as well, you would have seen our margins expanded in Q4 as well. And we expect a similar trajectory to also happen. But as of right now, like Dave mentioned, we are looking at similar operating margins for fiscal 26 versus 25 due to the reason Dave

mentioned. Got it. And then just to maybe delve into the two large deals, are you able to quantify the impact and maybe discuss the type of services you're providing? And to that extent, are there more large deals in the pipeline that you could potentially close in fiscal 26?

Yeah, look, I think, Mike, we've been consistent in our large deals definition, right? These are at a minimum $10 million in annual contract value. We're still going through the process of kind of finalizing the ramp up here. And we've been hopefully conservative in terms of their contribution relative to fiscal 26. We are actively ramping these deals at this point in time. So it's not a, you know, let's hope this is going to happen. But we're not going to be getting a full year's worth of revenue from either of these deals at this point. You know, one we expect to be fully ramped hopefully by Q2. The other should be ramping as we move through the first half of the year. So obviously, those deals will be a function of both the timing of the ramp and the overall size we have not disclosed. In terms of the type of work that's being done, as Kasia mentioned, one of the deals is in the banking and financial services space. It's worked for one of the world's largest payment platforms. And we're going to be doing risk operations, enhanced due diligence for them, user operations and technical payment processing. And the travel side, which is the second large deal, this is in the corporate travel management space. And it's going to be operations and fulfillment in addition to online bookings for them. So both of these deals kind of in core middle office for these companies and focus on things that are mission critical for running

the businesses. Yeah, and just to add to your second part of your question, look, the pipeline going forward is also very healthy. You know, we had a similar pipeline last quarter as well, and the pipeline continues. We are seeing some fairly late stage conversations in three or four clients. But as we mentioned in our remarks in a couple of quarters back, you know, from a guidance perspective, we will only include deals that are signed. So while we are optimistic about getting some of these closed in the next couple of quarters, once we sign them, we'll put them in the guidance. But the pipeline is healthy. There are some active conversations and the conversations are on multiple levels, including some of them are sources as well.

That's great to hear. Congrats on the quarter. Thank you.

Thank

you.

One moment for our next question. Our next question comes from the line of surrender. Jeffrey's LLC. Your line is now open.

Thank you. Just following up on the large deals. Are there any characteristics that we should be aware of in terms of maybe the duration of the contracts expectations are on productivity improvement? Or just more broadly with the newer contracts that you're signing, just any color that you can provide there with clients anticipation of your integration of AI and the productivity expectations?

Yeah, I think that's a great question. So I think the key is all of these large deal transactions help move us away from the traditional models that this industry normally operates in with clients and positions us significantly away in a higher value area away from traditional BPM. So that's the first thing I would like to say, because now what's coming to the fore is not just our superior knowledge of business domains and subdomains, but also our great understanding of technology analytics, digital transformation, our partnerships that we didn't speak about earlier, because that we have now created across all the large players, whether it is around cloud, whether it's around technology, whether it's agent, you know, whatever all of this comes together, which means the quality of conversation with these clients now moves from a PCO from a from a just a simple cost saving model to much more a PCO oriented kind of a model where we're actually walking in telling our clients that, you know, here's what they normally expect. So we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that we have a company that relationship with the client. It creates what I call a black box approach with each of these clients. It allows us to work on models that can over a period of time dramatically change margin profile. And more importantly, we always start with one area. But these large deals always have a path towards new processes and new areas. Like for example, the travel company that we spoke about or the banking platform company that we spoke about these are very large players globally. We may have started with one area, but we have already spoke out the next two or three areas that we will go after which potentially over, you know, And this is the approach that we are taking to not just the last lines, but also other traditional better, but a smaller clients where we believe the potential for creating a large deal is available.

I would just add to Kasia's comments, surrender that both of these deals are five plus years in duration. So, you know, kind of following that when you're doing transformation, it's going to take a long time for the client to get comfortable. And as a result, you know, these deals typically don't have, you know, one, two, three year kinds of life. So both of these are five year plus deals. The other thing that's interesting that we're seeing kind of across the portfolio is that the productivity commitments that we have to give to clients are a function of what they're ready to do and what they're willing to let us do on the front end. So if client is willing to let us deploy AI, GenAI, Agentsic AI as part of the upfront solution, then the productivity commitments over a five, six year period tend to actually be a little bit less. If the client is moving forward with us in today's model with an understanding that over the next four to five years, we're going to be deploying more and better technology, then the productivity improvements tend to be going up a little bit. So overall, I would say when you look at the profile of the deals we're signing, it's mixed. But overall, the productivity commitments at the company level are very similar to where they've been.

That's actually quite helpful. And then in terms of just maybe following up on some earlier commentary in the prepared remarks, when we think about client behavior, I think it makes sense that you probably would not see a material change given the focus and the types of works that you guys do. But you also talked a little bit about assuming no improvement in discretionary spend. Now, should you be assuming some degradation or is it just truly there's, we're too early in this, I would call, period of uncertainty for clients to actually be changing behavior or seeing for you to be seeing any change in behavior. Is it either the timing issue at this point or if clients truly just aren't changing behavior with respect to your line of work?

So look, let me try to turn that. Look, the core business that Dave mentioned earlier is basically the business cost technology business, right? Which is mission critical for clients. And of course, there we don't expect the seasonally changes because we feel a lot of that business is actually macronutrient. So as demand for cost decor increases, we actually expect that sort of business to be on similar levels. But your point on the discretionary expenditure, look, it's a difficult one. So at this point, I recall we've said our business guidance is 90% to midpoint. And that is in historical present, this is where we sort of look where we were typically at the Q1 in So at this point, we are not making any improvements or degradation. We are assuming that that part of the business continues in line with our core business. And, you know, given that with the acquisitions of KIPI and the TSE and VURAM, given the fact that our project based revenue has increased in percentage from where we were historically, any improvement in the macros or the discretionary expenditure will actually help us move out

of the office. Yeah, I think that's our just point. You know, we believe we've largely theorized this based on the visibility that we provided here. The reality is on top of that, Surinder, that if you look at the project work that we do, and obviously it's discretionary in nature, the client has to write a check upfront and then get the benefits over time. But if you look at the primary driver for our discretionary projects, whether that's procurement, whether that's automation, whether that's analytics, these projects all have a cost reduction theme to them. The only difference is as opposed to getting the savings day one, the client has to write a check first and then get the savings over time. So while we do believe that these projects could get deprioritized because they do drive cost savings and they are critical to clients, we believe that they're not going to drop that far in the prioritization. And in fact, if you look at project based revenues and the revenues that we've got from our acquisition, those numbers were relatively stable even in fiscal 25. That's helpful. Thank you.

One moment for our next question. Our next question comes in the line of Puneet Jain of JP Morgan. Your line is now open.

Hi, thanks for taking my question. So there's been some sensitivity to travel volume in the past with the macro environment. So with how things, where they are right now as it relates to macro outlook, what does the guidance make in for travel volume? How low some of those contracts are to possibly like the minimum level of commitments from those clients?

So let me start actually Puneet. It's a great question and I fully understand where you're coming from as far as the question is concerned, because of the macros. But you know, I'll let you in on a little secret. One of the biggest pipelines that we have really now is in the travel and the shipping and logistics space, which is a little counterintuitive because you would expect with all that is being spoken about, those are likely to get impacted the most. But some of the wins that we have had in this last year, the pipeline that we have now built, the decisions that we are seeing are all, you know, are very much focused on these areas, which means all of them are preparing for potential changes in their business model. So everyone seems to be very focused now on the cost leadership mantra, which actually plays in extremely well, you know, from our point of view, because many of them also seem to be first time outsourcers. And particularly in the corporate travel space, many of them have never actually done any of these programs. So with that having been said, I'll ask Dave and Arjeet to give you a little more color on the minimums and stuff.

Sure. Let me take some of that, Puneet. You know, look, I think we've been very consistent in explaining to you guys that the challenges that we've had in the travel space have really been because in certain areas we operate at the intersection of a volatile segment, right, in terms of travel, a volatile service offering in terms of CX, and a volatile business model in terms of digital. So where we've seen this impact in our business over the last couple of years and where there's been this pressure has primarily been in the OTA space. It has not been an airline operation. It has not been in hotels, because what we're doing there is more middle or back office focus. If you look at the OTA space and you look at where we were in Q4, online travel was down to 3% of company revenue. We have not baked in improvements in those numbers in fiscal 26. Certainly, if we add new logos, that'll help. Certainly, if we can help these clients move from traditional models to AI, agentic AI-led models, then that has upside for us. But at this point in time, we really feel that the online travel volumes for us are bumping along the bottom here. There really is very limited downside risk, especially because the fact that that 3% is spread over seven or eight different customers. We don't have a client concentration risk on top of the fact that we don't have a major business risk in the segment. And just

to add to further color, Kesha mentioned that our pipeline travel is very robust. If you look at some of the deals that we are talking about, a lot of those deals are actually in different areas like corporate travel and management, etc. which further diversifies our portfolio from being OTA and airline historically to more OTA, airline and corporate travel and management. And we feel that will also help us reduce any macro sensitivity around the business and gives us more depth and scale in the kind of work we do. Because each of these deals is large, complex, and they are really integral to the client office. So that's the way we all started to reduce the macro impact on the travel portfolio.

Got it. Thanks for that. And for the utilities client like where you had some headwind, can you talk more about like the nature of that headwind? What drove that? And also what percentage of your overall revenue stems from such platform-based services?

So overall, I mean, this is a platform migration, right? This would be part of what we report as technology services across the company. You know, we don't do tons of this work, but certainly if we've got clients that are looking for help here, we're happy to do that. We help this large client migrate their platform from an asset that they were using externally to one that they purchased. And then now we're continuing to manage that process on the new platform. So given our domain expertise, given our process expertise, we were the right partner for them to help do that platform migration. The challenge was that it created a little bit of a bump for us in revenue. This was Q2 and Q3. And once that platform migration was successfully completed, obviously that revenue stream fell off. So remains a very healthy, happy client for us. And obviously when you look at our segment reporting and you look at our business, you'll see this hit the utilities vertical. You'll see this hit the CX revenues. You'll see us hit the largest client in terms of customer concentration. And you'll see us hit the UK revenue. So as that kind of rips through the segment, that's where you see the impacts to the business from

Q3 to Q4.

And

Preet, just some commentary. I wouldn't call this a headwind. They mentioned why the revenues in Q2 and Q3 are up. But if you exclude those, you will see over the last six quarters, the numbers have been broadly unstable. So the volumes are there. Because we did some incremental work, it seems to be a headwind. But the underlying volume work continues. And as a client, we have great relationships with the client across the CXOs and the board level. So at this point, we have no cause of concern in terms of that.

Okay. Thank you.

Thanks, Preet.

Our next question comes from the line of Robbie Bamberger of Baird. Your line is now open.

Yeah, thanks for taking my question. So employees were up 2% sequentially and then accelerated to 7% in fiscal Q4. Can you maybe talk about your hiring plans and should we think of this as essentially a ramp before revenue acceleration in fiscal 2026 and then any color on geographies you're ramping in?

Yeah, that's exactly right, Robbie. I mean, if you look at the headcount additions in fiscal Q4, this is the ramp for these large deals that are ramping in Q1 and Q2. And obviously part of the reason we've got that margin pressure in Q1 and bleeding into Q2 a little bit is because we've hired in advance of actually getting the full revenue contribution. So you see that impact in Q1. But yes, a lot of what you've seen in terms of the re-acceleration and hiring in Q4 is about, we kind of ate through the excess capacity in the organization in Q2 and Q3 as revenue rebounded. Now we're hiring for Q2. And so

just a little, I'm just an additional commentary there as well. The Q4 headcount also includes the impact of the acquisition of PPP where we had about 6420 hours in March. So that's why the numbers might be a little skewed. But like Dave said, the bulk of this is towards hiring for the planned ramps and the revenue goal starting Q1 off. And I think the headline news, as both the gentlemen have said, is that growth is back. We are hiring. We are getting people ready to deliver on our priorities. But at the same time, I also want to mention that in terms of quality, we're also hiring people, lots more people onshore in our client facing locations, salespeople, more digital kind of people, more technology people, all of whom and more leaders who are actually facing off with end clients because we actually think that next year is going to be super exciting for us. So it's not just a case of hiring people who are delivering to these processes, but it's also hiring high quality resources who are now facing off with clients and leading these conversations around domain, digital technology, transformation and analysis.

Yep, very helpful. Thank you. And then maybe just turning to Gen. AI. Any way to put color on how many clients are currently using Gen. AI with you? And are you able to leverage those Gen. AI assets across multiple different clients? And then maybe thinking about the makeshift of contracts, should it move more towards fixed base or transaction based contracts as Gen. AI comes on?

Let me take that, Robbie. You know, I think to date we've deployed Gen. AI solutions at around 20 of our clients. Most of the work that we've done there is, and Gage has spoke a little bit about this in his prepared remarks, reusable components that we've created and packaging those reusable components to future Gen. AI as part of productized services. Right. So we create a technology asset, a digital asset. It leverages AI, Gen. AI, a Gen. AI. And then what we do is we wrap services around that product, around that platform so that we can create differentiated experiences for our customers. So we've actually been successful in deploying these assets with about 20 customers at this point in time. And we do see good demand for these assets. I think we will continue to see that progress as we move throughout fiscal 26. And the expectation is that the contribution in revenue is moving throughout the year from AI, Gen. AI, Gen. AI will continue

to increase. And that's the reason why earlier I also spoke about the fact that we have built very strong partnerships now with some of the technology providers on the other side, particularly around agent AI and some of these specific areas that will help us continue to be a very smart company. So 31 use cases across 20 clients that, you know, they spoke about 13 digital assets fully developed at this point in time, strong partnerships created, but more importantly, sending out a very strong signal to prospects and clients that we are ready to help them when they are.

Yeah, very helpful. Thank you.

Our next question comes from the line of Vincent Calicchio of Barrington Research. Your line is now open.

Yeah, another question on AI. Kasia, if I think last year you come up with a number for what portion of revenue will be tied to AI, would you like to take a stab at that kind of a number for 26?

Oh, that's a great question. You know, at this point in time, it is about 5%, you know, close to 5% of our revenue from these models. I think what we will expect is it will increase an inch upwards, but at this point in time, we're not in a position to give you a specific number. But I think this is a question that we can keep, you know, asking across the borders.

And to what extent is access to skilled labor on the AI side limiting your growth there? Not at

all. Like I mentioned earlier, all the new leadership positions are actually based out of the markets, right? And around them, our ability... Look, we don't need large armies of people to do this. We need focused, small teams who can come in and help us, you know, manage. So if you look at it, some of it is coming in through our, you know, organic growth and acquisition of talent onshore as well as offshore. Some of it is coming through acquisitions, smart acquisitions like Kippy that we just did. I mean, 600 people coming in just from that one acquisition is how we are managing it. So at this point in time, while we are very well-set and well-prepared in terms of leading our customers down this path, we also think there will be a time frame for clients, particularly the traditional clients, to move away from the old models that they're used to, some of these new models to leverage these areas. And therefore, we will have enough access to talent. We will have enough opportunity to upskill, reskill, you know, existing talent. And we will have enough opportunity to lead in terms of some of these areas.

Thanks for that. And just one more. What caused the spike in attrition? Is there anything meaningful to see there?

Nothing specific, Vince. I mean, all the attrition was once again focused at the entry level in the organization. We've got strong ability to manage that. Actually, there's a certain amount of attrition at that level healthy to running our business and maintaining our cost structure. So nothing that we're concerned about, nothing that we believe is trend, that number just tends to jump around and work for us. I

think at a high level, I'd also say that when growth is back at an industry level, one should also expect some of these things to happen.

Thanks, guys. Thanks, Vince.

At this time, we have no further questions in the queue. This will conclude today's conference call. Thank you for your participation. You may now disconnect.