Thank you, Rashi. Good day to everyone.

We sincerely appreciate your presence and participation in today's call. Let me quickly outline the agenda for today's call.

Sandeep will begin with an overview of our Q2 results, commentary on the business, and update on our acquisition of Nagarro. Vinit will take you through the financial details and key operational metrics for Q2.

Nitish will provide details on expansion of our AI capabilities and representative AI wins in the quarter gone by. I will then provide an overview of our key deal wins and awards and recognitions for this quarter.

Sandeep will then come back for a quick summary of the prepared remarks, post which we will open the conference for questions. Let me also remind you that as part of our prepared remarks and during Q&A, we may make certain statements which are forward-looking and may involve significant uncertainty.

Persistent does not take any responsibility to update such forward-looking statements, and your discretion is warranted while making any investment decisions. With this, let me hand over to Sandeep for his prepared remarks.

Thank you, Saurabh. Good morning, good afternoon, good evening to all of you, depending on where you're joining from.

I hope all of you are doing well. Let me start with a quick financial summary of the quarter gone by.

We achieved a healthy revenue growth of 7.8% quarter-on-quarter and 20% year-on-year, delivering US$487.6 million in Q2 FY27. This marks our 26th sequential quarter of revenue growth.

In rupee terms, the growth for the quarter came in at 8.4% quarter-on-quarter and 30.3% year-on-year. In constant currency terms, the growth for the quarter was 7.8% quarter-on-quarter and 20.8% year-on-year.

The EBIT margin for the quarter came in at 15%, translating to an EBIT growth of 1.6% quarter-on-quarter and 19.5% year-on-year. The operating profit after tax for the quarter came in at 10.6%, translating to a PAT growth of 2.5% quarter-on-quarter and 5% year-on-year.

The reported profit after tax for the quarter came in at 7.5%. I would like to point out that the reported PAT includes exceptional one-time expenses as part of Nagarro acquisition, resulting in approximately 3.1% impact for the quarter.

Vinit, our CFO, will provide a detailed color on the financials and margin movement later in this call. Coming to the order book for the quarter, the total contract value for the quarter stood at US$633.5 million with total contract value of new bookings coming in at US$367.1 million.

The annual contract value of bookings for this quarter was US$481 million, out of which the annual contract value from new bookings contributed to US$262.3 million. To remind everyone, both TCV and ACV numbers include all bookings: small and large, renewals as well as new bookings across existing and newer customers.

Also, as highlighted in our earlier calls, our revenue conversion on a quarterly basis is a function of ACV bookings closed in previous quarters as well as the conversion from multi-year deals booked in previous years, which are included in our total contract value or TCV bookings that we announce on a quarterly basis. Now, let me give you some color on our client movement across various reported categories.

This quarter, we witnessed healthy year-on-year growth among our various client buckets. Our top five customers revenue grew by 38.9%, top 10 by 29.9%, top 20 by 25%, top 50 by 24%, and top 100 by 21.6%.

Coming to the year-on-year movement of customers across various reported buckets, customers with annual revenues greater than $75 million remained stable at four. Those with US$50 million-plus annual revenue remained stable at four.

Customers in the US$20 million-plus category increased from 12 to 13. Those in US$10 million-plus category increased from 25 to 34.

Customers in US$5 million-plus category increased from 56 to 60, and the customers in US$1 million-plus category increased from 191 to 218. This healthy movement of customers across various revenue brackets demonstrates our team's consistent ability in cultivating deeper, more resilient partnerships with customers over time.

Now, coming to the details of our performance across various geographies. In terms of year-on-year growth this quarter, in US dollar terms, North America revenue grew by 22.5%.

Revenue in Europe declined 8.5%, largely because of two client-specific events. One of our key clients in the European region was acquired by a larger strategic last year, which led to the ramp-down of our program with them over the last several quarters.

Another engagement completed its planned ramp-down as a part of a fixed-price engagement. Both are one-off client-specific events rather than a sign of broader geographic demand trends.

Revenue in India grew by 19.4%, and rest of the world grew by 67%, although on a smaller base. Coming to industry segments growth on a year-on-year basis, this quarter's growth was led by Software, Hi-Tech and Emerging verticals, coming in at 28.5%, followed by Banking, Financial Services and Insurance at 16.2%, and Healthcare, Life Sciences vertical at 12%, respectively, on a year-on-year basis.

Growth in our Software, Hi-Tech and Emerging industries vertical was driven by our new software reinvention offering launched during the quarter, underpinned by the theme of the large deal that we announced last quarter last quarter. As Hi-Tech is an industry that is most affected by advances in AI.

Enterprise software companies, as well as enterprises, are rethinking how software is built and maintained. Our software reinvention offering is designed to help software and technology companies deliver AI-native products as well as modernize their legacy products for an AI-first world.

This is traditionally a segment where Persistent has always been significantly ahead of our peers, and we are confident that this offering will drive growth across the business, creating a significant moat for us over the next several years. My colleague, Nitish, will cover it in more detail on this offering in the AI updates section a little later in this call.

Let me now provide you with an update on the agreement to acquire Nagarro that we announced earlier in June this year. As you may be aware, we signed a business combination agreement in late June time frame with Nagarro, a leading European digital engineering firm, aimed at creating an AI-led global engineering powerhouse serving clients with end-to-end capabilities with over $2.9 billion in revenue run rate and 46,000-plus professionals across 40 countries.

To refresh everyone on the acquisition rationale, the combination provides us with expanded capabilities across multiple industry verticals and service lines, more balanced geographic mix across North America, Europe, and rest of the world, strengthened nearshore European delivery footprint with presence across Romania, Portugal, Hungary, and Poland, and positions us nicely as a truly global partner for large transformation programs with our Global 2000 customers and prospects. This is further backed by strong cultural alignment between the two organizations, anchored in entrepreneurial ethos, an engineering-first culture, and decades of trust with marquee clients.

We are confident that this combination positions Persistent and Nagarro for the next chapter of sustained, profitable growth together. Let me now provide you with the progress made since the last quarter in terms of the process, as some of you may be tracking the closure timelines closely.

Starting with the open offer update, the initial acceptance period for voluntary public takeover offer for Nagarro began on August 6th, 2026, and ended on September 17th. The additional acceptance period began on September 23rd and ended on October 6th.

We have secured approximately 94.04% of Nagarro's share capital, excluding treasury shares, at the expiry of the additional acceptance period, significantly exceeding the minimum acceptance threshold of 50% plus one share that we had set. Having secured more than 90% of Nagarro's share capital and voting rights, we intend doing a squeeze-out of the remaining minority shareholders of Nagarro upon closing.

From a merger control clearance perspective, we have received all merger control clearances and all FDI clearances, other than Austria and Spain. We are confident of getting these approvals in over the next several weeks.

We've also submitted the application for Reserve Bank of India's approval, and we are following the due process to get our approval thereof. In terms of financing, we intend replacing the €1.4 billion 18-month bridge loan with longer-tenure capital and favorable terms.

As a part of this long-term financing strategy, we'll be raising US$1.25 billion in terms of both debt and equity. Out of this, US$450 million will be raised through equity, qualified institutional placement, or equity-linked instruments like FCCB, or combination of similar instruments.

We have received the shareholder approval for the above funding mix at the Extraordinary General Meeting held on October 5th. We sincerely believe that the combined Persistent-Nagarro group presents a significant value creation opportunity for all our shareholders, clients, partners, and employees.

As a part of this acquisition, I would like to highlight an important aspect around one-time expenses related to the transaction. Overall, we are expecting one-time expenses to the tune of approximately $50 million spread over three to four quarters.

These expenses will weigh in on the reported EPS growth, as you would have seen in our Q2 results, reflecting an impact of around 3.1% on our reported PAT. We'll be accounting for these expenses as they occur and will inform you all as we incur these expenses.

Also, as you may be aware, our ESOP vesting criteria for our team members is conditional on achieving a 12% revenue growth and a 12% EPS growth. In line with this, the board may seek shareholders' approval to treat these one-time transaction-related expenses as an exception when assessing the ESOP vesting conditions.

To summarize, all the processes related to the Nagarro acquisition are going on at the expected pace. We expect the deal closure by Q4 CY26 or Q1 CY27.

We'll keep you posted on the progress of this over time. We'd like to place, again, on record our appreciation for Nagarro's management board as well as its supervisory board for their ongoing support and cooperation in the acquisition process.

We are enthusiastic and look forward to working jointly with them and our extended Nagarro team to make this combination successful for all our stakeholders over time. With this, I would like to invite Vinit, our CFO, to provide more details on our financials for the quarter.

Vinit, over to you.

Thank you, Sandeep. Good morning and good day to all.

Thank you for taking the time to join us today. Let me now take you through the financial highlights for the quarter.

Q2 FY27 revenues stood at 487.6 million US dollars, registering a year-on-year growth of 20%. In rupee terms, it translates to 46,639 million rupees, a growth of 30.3% year-on-year.

EBIT for this quarter was 6,977.2 million rupees, translating to a growth of 19.5% year-on-year. EBIT margins for Q2 FY27 came in at 15%, 130-basis-point decline year-on-year.

I will now talk about some operational updates for this quarter. At the end of Q2 FY27, our total headcount stood at 29,598, an increase of 958 from previous quarter.

Utilization stood at 85.8%, down 70 basis sequentially, primarily reflecting proactive hiring to support the ramp-up of large deals. Trailing 12 months attrition stood at 11.9% compared to 12.3% the previous quarter.

Let me now give you quarter-on-quarter EBIT margin walkthrough. First, headwinds.

As you would remember, this is the quarter when we have the yearly wage hike coming into effect. This impacted our margins by 180 basis point.

However, lower ESOP cost enabled us to absorb part of this impact, leaving us with a net impact of 140 basis point. Lower utilization led to a 20-basis-point impact on our EBIT margins.

The large deal that we have announced in the previous quarter included end-to-end takeover of the engineering roadmap of portfolio of 20 products across development, sustenance engineering, customer support, along with associated third-party licenses and cloud spend. This investment in the third-party tools and licenses led to an increase in the quarterly amortization of approximately 4 million US dollars, which had an impact of 90 basis point on our Q2 EBIT margin.

The plan is to leverage FinOps and AI-led engineering roadmap to optimize the spend across people, tools, and cloud infrastructure in this large deal going forward. As we optimize this spend and our revenue scales in future, the impact on our margins will gradually reduce.

Tailwinds. Lower SG&A expenses and favorable currency movements delivered a combined EBIT margin benefit of 150 basis point.

Net impact. Taken together, these headwinds and tailwinds resulted in a 100-basis-point quarter-on-quarter decline in EBIT margin.

In respect of our treasury income, we had mark-to-market losses on our investment during the quarter of ₹116.4 million as against mark-to-market gain of 146.7 million rupees in the previous quarter. During the quarter, we had higher finance charges on account of higher receivables financing.

The net result of both lower treasury income and higher finance cost resulted in negative net other income of 131.2 million rupees as against a positive income of 414.9 million rupees in the previous quarter. The foreign exchange loss was 455.8 million rupees as against 1,052.7 million rupees in the previous quarter.

Forward contracts outstanding as of 30th September 2026 were 500 million US dollars at an average rate of 95.6 per dollar. Effective tax rate for the quarter came in at 22.5%, same as last quarter.

Operating profit after tax for the quarter was 4,951.5 million rupees, margin of 10.6%, with a year-on-year growth of 5%. We incurred transaction costs worth 1,853.4 million rupees towards the Nagarro acquisition in this quarter.

These expenses include transaction and advisory costs related to regulatory filing, financing charges, legal, communication, and travel expenses. Over the next two quarters, we expect an incremental amount ranging between 25 to 30 million US dollars to be incurred towards the Nagarro transaction.

For Q2 FY27, these expenses impacted the reported PAT margin as well as the reported EPS by around 3.1%. Reported profit after tax for the quarter was 3,515.1 million rupees, a margin of 7.5%, with a year-on-year decline of 25.4%.

Operating earnings per share was 31.6 rupees with a year-on-year growth of 4.2%, whereas the reported earning per share was at 22.4 rupees, which translates into decline of 26%. Excluding cash from the capital employed, return on capital employed for Q2 FY27 came in at 45.6% versus 43.6% in the previous quarter.

We are happy to report that we had record collections during the quarter, which helped to improve the cash position in spite of payment of final dividend and exceptional expenses related to Nagarro transaction. Total cash and investments stood at 29,996.7 million rupees, around 315 million dollars, as of September 30, 2026, as against 27,044 million rupees at the end of previous quarter.

Higher collections also helped reduce the billed DSO, as well as led to the higher OCF to PAT for the quarter. Billed DSO decreased to 50 days as against 61 days in the previous quarter, while the unbilled DSO came in at 24 days as against 25 days in Q1 of FY27.

On TTM basis, trailing 12 months basis, OCF to PAT improved to 96.6% in Q2 of FY27 compared to 76.2 in the previous quarter. Coming to updates on ESG, sustainability continues to be integrated into Persistent's business strategy with a focus on managing risk, improving operational efficiency, and delivering measurable ESG outcomes.

Our commitment to ESG excellence was reflected in an improved ESG score of 83.3 from SES, a SEBI-registered ESG rating provider, for FY25-26, up from 81.7 in the prior year, underscoring continued progress in the execution of our sustainability strategy. We are proud to have received a jury mention in the Climate Action & Carbon Neutrality Leadership category at the Sustainable World Awards 2026 by BW Businessworld.

Persistent Systems, Pune, has also been recognized as the winner of the Decarbonization Excellence Award 2026 in the Net Zero Carbon category at the Kool Conclave by ISHRAE. We are also proud to be recognized as one of America's Greatest Workplaces in Tech 2026 by Newsweek.

These achievements reinforce the progress we are making in embedding sustainability across our operations, climate action, and people practices, while continuing to strengthen our overall ESG performance. With this, let me now hand over to Nitish for commentary on our progress on the AI journey.

Nitish, over to you.

Thank you, Vinit. Good morning and good day to everyone.

As we shared on our last call, our AI strategy continues to rest on three pillars: engineering hyper-productivity, business hyper-productivity, and enterprise data readiness with responsible AI. We believe the next phase of enterprise AI will be defined not by better models alone, but by how well enterprises combine them with their own knowledge, data, processes, people, and governance.

We call this the enterprise context, and our 3C architecture of core, context, and coordination is how we help our clients build it. Last quarter, we enhanced our software engineering productivity offering with the launch of software reinvention services, a new offering aimed at helping enterprise software companies accelerate their next-generation products while improving the economics of the products they run today.

Software companies are facing challenges on two fronts. On one hand, they are facing challenges on growth as AI-native companies and model providers compete for their customers.

On the other hand, they are facing challenges on cost as their established products must generate the margin to fund AI investment, while the AI consumptions add a new and fast-rising cost. Software reinvention services addresses both, starting with growth.

On growth, we are helping our clients build new products faster and take them to market faster. For new product development, we are focused on speed and quality.

We deliver AI-led development acceleration through our SASVA platform. SASVA runs on our custom-tuned models and also work with models from Anthropic, OpenAI, and leading open-source providers, which gives our client flexibility in their choice of models.

Clients can adopt our AI stack as a complete platform or deploy it alongside their existing AI tools, where it adds measurement, collaboration, and structured ways of working. We are now working with our client's product managers to prioritize the features most likely to achieve product-fit in the market.

In recent programs for software companies, this approach has helped bring product to market about 50% faster. For go-to-market, we are helping our clients reach and win customers faster.

Together with a leading private equity firm, we are building an AI-powered go-to-market harness to helps its software companies reach their customers faster. Additionally, in select cases, we are building products with our clients in a co-sell motion.

Our AI-led professional services model is turning into delivery expertise by getting our client's customer live sooner and improving time to market by more than 25%. On cost, our focus is on improving the economics of client's established product because the margin from established products fund the forward-looking AI growth.

These products carry years of accumulated cost, and we apply AI across the full cost of ownership in three distinct areas. First, we're running mature product through the AI-led sustenance and helping our client carved-out products outside their core.

For example, for one marquee software company, we have taken over several product lines in data operation, data governance, and endpoint management. We are now running their engineering, sustenance, and go-to-market while reducing their cost of running these products by 45%.

Second, we are helping clients bring cloud and AI consumption cost under control. We are combining cloud optimization with AI-led engineering and FinOps to reduce cloud consumption and operating cost.

Our tokenomics offering and SASVA's intelligent model routing, which matches each task to the most suitable model, are keeping token cost under control. Third, we are reducing both labor and non-labor spend across SG&A.

On the non-labor side, we are re-architecting products and replacing long-tail tools with custom agentic applications to lower third-party license cost. On the labor side, we're bringing agentic system into SG&A and automating workflows across IT, HR, finance, and procurement.

Our clients are, in turn, reinvesting these savings into new products and go-to-market, cost efficiency becomes fuel for growth. A strong validation of software reinvention services is the large deal we signed last quarter, a 6.5-years engagement worth more than $650 million with one of the largest technology companies, spanning product development, support, and cloud operations across multiple SaaS products.

Our position in the market is built on long product engineering experience. Over 36 years, we have engineered product for more than 300 software companies, and today, we are serving nine of the top 10 technology companies.

Through Accelerite, we have also operated our own software product business, which gave us the direct experience in building, selling, supporting, and sustaining enterprise software. We're now turning that experience into repeatable playbook that combines our platform, partners ecosystem, and accelerators.

Software reinvention services is drawing on the same platform and capabilities that are powering our broader AI strategies, and the same disciplined approach is continuing to deliver results across our three pillars. The quarter gone by, we continue to expand our partnerships by becoming a preferred partner in Anthropic's Claude Partner Network Services Track and earning Microsoft's Agentic Business Solutions Specialization.

Our teams today hold nearly 25,000 partner certification across Microsoft, AWS, Google Cloud, Salesforce, Databricks, and Snowflakes, and have earned more than 58,000 AI certifications to date. In summary, as models commoditize, enterprise software differentiation is shifting to the context around them and to the economics of the product the clients already run.

We are helping clients build new products, fund them from the products they run today, and bring them faster to the market. We are turning that work into durable, client-owned asset and applying the same playbook across engagements.

This is where Persistent is continuing to invest, and where we see long-term value for our clients and our shareholders. I will now invite Saurabh to share other key wins and awards for the quarter.

Thank you, Nitish. Let me now talk about the most important deal wins for the quarter by industry segments.

Starting off with Software, Hi-Tech and Emerging industry vertical, a leading hyperscaler has selected Persistent as a preferred partner for its newly formed forward-deployed engineering organization to scale legacy modernization and transformation programs. Our dedicated, certified FDE team will work alongside the hyperscaler's forward-deployed engineers as an extension of its delivery capacity, embedding directly with customers to modernize and platformize mainframe and legacy estates across industries.

These engagements are anchored in business outcomes rather than effort, providing customers with a faster, lower-risk path from legacy systems to AI-ready platforms. Moving on to Banking, Financial Services and Insurance, a Fortune 500 US insurer has selected Persistent as its AI-led modernization partner for its personal lines policy administration.

The business was running critical underwriting, rating, and renewal processes on a legacy core platform, which was leading to inefficiencies and higher costs. Our engagement with the customer involves rebuilding a modern, cloud-native policy administration platform.

The first phase of the program, powered by our proprietary AI accelerators, will demonstrate a repeatable, automated path from legacy to modern architecture. Subsequent phases will reduce operating costs, accelerate product and pricing rollouts, retire legacy spend, and expand into adjacent lines of business.

Now coming to our Healthcare and Life Sciences vertical, one of the largest cancer research and treatment organizations in the US has chosen Persistent to manage the technology that supports cancer care across its national network. As part of the engagement, we will bring clinical applications, enterprise systems, data, and infrastructure under a single delivery model, while providing on-site support at care locations.

We will leverage AI to capture critical knowledge, ensuring that patients and clinicians experience minimal disruption during the transition. Our oncology and revenue cycle expertise will help the client deliver more consistent care across its locations.

Now coming to the key awards and recognitions we received during the quarter. Persistent continued to receive multiple leadership recognitions from ISG in this quarter and received six awards at the ISG Information Services Group Provider Lens Awards 2026.

The recognitions spanned digital engineering, AI, cloud ecosystems, cybersecurity, and industry services, demonstrating the depth of expertise across Persistent. Persistent was recognized as, for the second year in a row, achieved the Growth Honor of the Year in annual revenue more than USD 1 to 5 billion category at Everest Group Elevate 2026.

Persistent received multiple awards for its commitment to ESG and people excellence. The most prominent amongst them included: Persistent won Businessworld Sustainable World Awards 2026 in the Climate Action & Carbon Neutrality Leadership category.

Persistent was also honored across seven categories at the People Matters [Unclear] Infinity Awards India 2026 for excellence in talent and employee experience. With this, let me hand it back to Sandeep.

Thank you, Saurabh. Let me conclude the prepared remarks by saying that we are happy with the consistent performance we have been able to deliver this quarter.

The consistency of execution quarter after quarter is the testament to disciplined execution along with our clear strategy. We're making good progress on our AI capability build, client engagements, as well as our Nagarro acquisition.

I'd like to sincerely thank our employees, clients, partners, and shareholders for their strong support and sustained confidence in us. With this, I would ask the operator to open the floor for questions.

Operator?

Hi. Thanks for taking my question.

Congrats to the management team for a very strong performance, yet again, quarter after quarter. Sandeep, one question from my side to you, and one I'll have for Vinit.

We saw very strong growth performance this time, both in Hi-Tech and BFSI vertical. Hi-Tech vertical, of course, we know was driven by the large deal that we had won last quarter.

In the BFSI segment, what is the kind of, basically, traction that we are seeing? Specifically in terms of the pockets that we are seeing in growth, the AI adoption which Nitish talked about, and what is the outlook for this sector?

Specifically, most of the peers are also reporting decent growth, I would say, in the BFSI segment. Is it safe to say that BFSI, being the most early adopter of the AI platform, is a segment which is kind of going the up curve, and we could see more and more growth coming from that vertical?

Yeah. Vaibhav, the growth that we saw in the quarter, I'll first talk about that, then come to the BFSI part.

It was underpinned by two large things that happened. One was a large deal that we did with one of the largest tech customers we have.

The second one is basically a vendor consolidation exercise that happened in one of the largest financial services customer that we have. Both of the things combined were large wins that we had over the last few quarters.

Now, if you look at the themes that we are seeing in the financial services, vendor consolidation in pockets is still a big theme. Second is the modernization side of it, whether it is the data modernization play, getting the financial services institutions ready for the AI part.

That is one big set of themes that we are seeing. Second is the modernization from the legacy platform side of it.

Earlier, the legacy platforms, etcetera, that people thought they could not modernize, whether they were mainframe-based or otherwise, are unlocks that AI is providing us. Those are the things that we are seeing at a bigger level.

Now, in terms of the outlook, our pipeline is healthy. We don't give forward-looking guidance.

We are relatively confident that all the segments will kind of grow very well. One comment that you made, that BFSI is an early adopter of AI platforms, I would say, in our mix, it is the Hi-Tech part which is the most disruptive.

They are the companies, and within the Hi-Tech part as well, 20% of the ISVs, I would say mid-market ISVs, are on the bleeding edge. That is where we are seeing the maximum adoption, the maximum productivity demands from our customers.

Since we work with them, we're very comfortable taking the same to the BFSI and Healthcare, Life Sciences verticals, which are a little slower in adoption given the regulatory nature of most of the constituents in those verticals. Hopefully, that answers.

Yes, yes, Sandeep. That's really helpful.

Just a small extension on that part. As we are seeing this AI adoption, as you mentioned, across maybe Hi-Tech companies first and then maybe followed by the BFSI companies, is the high token cost also becoming a factor for these companies to approach more and more IT services vendors so that we can optimize the token cost for them by maybe building an application layer or anything on that front, any color on that would be really helpful?

Yeah. Fair point.

There are two, three things if we peel the onion a little deeper. On one side, the companies in these various sectors are recognizing that there is a frontier model play, and there is a play for purpose-built small language models, which may be open-source models, open-weight models, or even building algorithms.

That's what Nitish also referred about. In SASVA, for example, we have created pathways.

Only a few things that need to go to the most expensive models go there; the rest can be done on purpose-built models. That is the place where they are bringing in people like us to help them evolve what technology, what model, what way to optimize this.

Then, even when they are using any of these models, they're putting the token-related FinOps equivalent of the cloud world to control the token cost. There are multiple things happening there.

Got it, got it. Just one quick question for Vinit, if I can.

Vinit, you mentioned 90 basis point impact of the large deal ramp-up, which happened in this quarter. Is it fair to assume that for the next two to three quarters also, that impact will be in the base, and gradually as our revenue base grows, that impacts is going to gradually come down?

That's right. As I mentioned in my comments also, that as we optimize some of the cost, as well as increase our revenue also increases, this will gradually come down.

Got it. Perfect.

Thank you so much for taking my questions, and wish you guys all the best. Thank you.

Yeah. Hi.

Thank you for the opportunity, and congrats on the quarter and 94% on Nagarro. Two questions, actually.

Sandeep, the software reinvention services which we have launched, we had done this prior to 2019 as well. I was just curious, how is it different in terms of the shape and form this time?

Even in the context of what we have sort of absorbed from the deal, let's say the intangibles are up like $100-odd million and you did mention that as revenue improves, the margins will sort of normalize. Is there a cap on the amount of revenue you can have in a deal like this, or it has to be through cost coming down?

Just wanted to understand how it's different from the last time.

Yeah. Two, three things.

How is it different from the last time? There's a difference on the technology side; there's a difference on the commercial side.

The difference on the technology side is this: if you look at AI, what does AI provide us as a big lever? What is, more specifically, when Nitish talks about SASVA, the ability that today we have is, if you give us a mid to late-stage product, using technology, we can very clearly map out what happened in the product right from its release one to now, what were the features that were delivered, what was the effort that was there, what is the current hotspot in the product, what is the mapping of the product to the current So that these products are architected anywhere between 5 to 15 years back.

How do they use the current cloud versus the capabilities that the current cloud has to offer today? By re-architecting, how do you kind of bring down the cloud consumption and hence improve the overall profitability for the product?

Also, which other third-party licenses are embedded in the product that you can replace over a period of time by using AI to build custom-built components and so on? From a technology perspective, the landscape has changed significantly over the years, and it continues to change significantly by the quarters.

That is the biggest difference that I would say. In terms of the commercials, the commercials are structured in a way that it is an outcome-based deal where we have assured a certain cost saving for the customer, and it is a revenue-share kind of a construct where as the customer sells them the product more, we get a certain percentage of revenue with a certain backstop.

From that perspective, it is learnings from the past from business models, constructing an outcome-based model, which is a win-win for our customer and for us, and using our AI prowess to make sure that we are not just deflating the labor cost, but also the third-party license cost and the cloud consumption cost, coming together of which is hugely profitable for the customer, and we gain a good share of that as well.

Sure. Perfect.

That's very helpful. The other thing was, in terms of deal wins this quarter, my understanding was, last time, we didn't include the $650 million deal in the deal wins.

This time, if it's adjusted for that, looks relatively softer. I was just curious, is that a right interpretation or am I missing out something?

No. I am pretty sure if you go back and look at our financials, the deal win was included.

The TCV was at an all-time high for us. I'll be pretty amiss if that was not included.

Please review the data. It is included in the last quarter, and the revenue conversion partly had happened last quarter, and a bigger thing we had clearly said in the last earnings call that 75% to 80% or more of the deal would have ramped up by this time.

That's what you are seeing in our revenue realization. Correct,

correct. Perfect.

This is very helpful. Thank you so much, Sandeep.

Thanks a lot.

Last time, not included [Foreign Language]?

Please check the fact sheet and the ACV, TCV bookings for the last quarter.

Hi. Good evening.

Am I audible?

Yes, please.

Yeah. Thank you.

My first question was around the software licenses, which have been increasing over the last two quarters. Is that related to the large deal ramp-up, and hence could be lumpy, could come down in the coming quarters?

Or is that related to AI services picking pace, and this could be structural now part of the business?

Yeah. It's a combination of both, Rakesh.

It's a software licenses, as we have said, the deal encompasses the software licenses that are embedded in the products as well. Part of it is that, and part of it is our investment into tools that we are building.

Some of them even are based on third-party tools as well or softwares. It's a combination of both.

Directionally, we should assume this to be steady at these levels?

If we have more deal wins where we do these kind of software reinvention as a practice grows bigger, some of these may go bigger. You should look at overall profitability.

We sincerely believe that this could be a significant moat for us and could also be a profitability enhancer over the next several quarters as we bring volume into this reinvention practice for the enterprise software.

Absolutely. Great.

My second question was around margin. With wage hike now behind us and amortization, as Vinit was saying, should start at least the optimization should start kicking in, is it fair to expect the margin should start recovering from here?

Any year-end margin target you would want to share?

Yeah. From our perspective, we have said we want to be in the 16% to 17% range.

That is our aspiration. That will be our endeavor, but we'll let the quarters pan by.

We don't give forward-looking guidance. Please take this as an aspirational goal.

We want to be in that bracket, and we want to make sure that we continuously grow. Growth comes, we win deals, we can always optimize deals and increase profitability.

That is where it is.

Perfect. Thanks a lot, Sandeep.

Hi. Am I audible?

Yes, please. Yeah.

My first question is on the deal wins reported this quarter. On a YoY basis, the deal wins, they appear relatively soft.

I'm just trying to understand, getting more color on this, whether one, is this reflective of a particular vertical or it was broad-based? Also, whether this was related to a slower decision-making in this quarter or the productivity benefits are also leading to lower deal sizes?

Yeah. Multiple questions there, and let me clarify for Nitin as well.

The ACV reported in Q1 FY27 was $536.8 million, and the TCV was 1,146.2 million dollars. Roughly about $1.15 billion.

That definitely included the $650 million of the large deal that we talked about, and the ACV of 125 million that we talked about from the large deal. Now coming to this quarter.

This quarter, the ACV of 481 million and TCV of 633.5 million is a reasonably good clip. We had a few deals that slipped over into this quarter.

No excuses, we could have done better. Yes, the macro does impact us.

The slowdown of decision-making in the last few weeks was pretty apparent. It was not the productivity side of it.

It is just the nature of the deals and some of these get impacted when the Middle East dynamics kind of go up or down.

Understood, Sandeep. That is very clear.

My second question is on Nagarro, on the acquisition that we're doing. We've mentioned in the past, and today as well, the tailwinds that we can receive from this asset over the longer period of time and the rationale behind it.

I'm just trying to understand that what can be some of the quick wins that you internally would target, and we should target from outside when you integrate this asset over the coming months?

Yeah. Let me first talk about where we are in the deal, because some of this is linked to that.

We are awaiting RBI approvals and the FDI approvals in Austria and Spain. We expect, in the next four to six weeks, max, let's say eight weeks, that's our hope and expectation.

Obviously, these approvals have to come when they come. As they come, we pay the tendered shares owners, and we close the deal.

Once we close the deal, this is now, since we have more than 90% of the shares, our intent is to do a merger squeeze-out. Basically, if we do that, we will need about five to six months to optimistically bring the two companies together.

Even before that, we can start working together where we have signed a cooperation agreement. We can try and take their services into our customers and vice versa.

That is the stage where we are. Since the deal is not yet closed, we are two public companies working independently.

We have a limited ability to go in and build a synergy plan and so on. We'll wait for the closure.

From what we saw in diligence and the post-diligence discussions at a high level, there is the real estate of customers out there. They have more than 200 $1 million-plus dollar customers, and the overlap with our 200 $1 million customers is only 10.

There's a significant real estate, and the quality of customers is impeccable. The quality of their capability is pretty good.

They have certain capabilities like SAP and even the investment that they have done in consulting capabilities on AI, etcetera, are pretty good. There's a lots to be done, but we'll have to just be patient for the closure.

Then, once we close and we have a synergy plan built out, we'll talk to our investors on that. We do see significant potential both sides to leverage each other and upscale our business.

Understood.

Understood. Thanks for taking my question.

Can you hear me?

Yes, please.

Thanks for the opportunity. Two questions.

First is in terms of intangibles, there seems to be a ₹900 crore-plus increase quarter-on-quarter in terms of intangibles. What's the driver for that?

Was there any consideration payable in the deal? The second is in terms of margins of this deal, because if I look at your segmental margins in Hi-Tech, they seem to be almost, on the incremental revenues, almost 20% lower than your segmental margins that you've been doing in the past.

What's the kind of margins and how the gradation moves as you go forward? The last one is in terms of Nagarro debt, any sense in terms of what's the cost of that debt, and what's the duration that we're looking at?

Vinit,

let me answer the intangibles and the margins; you take over the Nagarro question. If you look at it, as we clearly articulated earlier in this call as well, and we have said this when we announced the larger deal, the thing that we are trying to do is this: we are trying to take the ownership of end-to-end outcome for the profitability of a software product across 20 different products.

It's a portfolio of 20 different products where we are basically not just responsible for the people side of it; we are responsible for taking out the third-party licenses, which is one big thing that AI is enabling people to do. Third, by re-architecting the product, we intend to reduce the cloud spend over the years, and that is a big margin lever for this entire set of products for this customer.

That is the hypothesis why someone would engage a company like us with the right capabilities to do this over years. With that comes the onus of taking over the cloud spend, taking over the spend on these licenses that we are basically going to reduce over a period of time, and that's what is showing in the intangibles, etcetera.

As far as the margin in the Hi-Tech is concerned, part of the thing would be because of this deal, part of the thing could be because of other productivity gains, etcetera, that we are giving. Please look at us as a sum of parts.

Within Hi-Tech, whether it is multiple deals, multiple customers, within the company, multiple different customer segments and service lines, etcetera, our endeavor is to deliver at any point in time, bringing together a good growth, even if, let's say, Healthcare, Life Sciences sometimes goes down in terms of growth, Banking, Financial Services, Hi-Tech come up. Similarly for margins.

Please look at that, just as you would look as investors at a portfolio of your own investments. Not everything pans out every month at the same clip.

We are reasonably assured in our minds about what we have signed up for, our ability to optimize margins over a period of time, and deliver to our aspirational goals of 16% to 17% margins and the growth that we aspire. Hopefully, that answers, and I can take more after Vinit has answered the Nagarro question.

Vinit, if you can please answer the Nagarro debt question.

Hi, Ashwin. See, it's a separate company, I won't be able to comment on their behalf specifically.

What I can tell you is it's a revolving credit by five banks. At this point of time, it's pretty much competitive, linked to the SOFR rates.

At this point of time, we are in the process of getting that debt refinanced with the existing bankers as well as with looking at alternatives with the bankers that Persistent is working.

Vinit, I was looking at what would be our cost of debt for the acquisition, not the Nagarro.

Yeah. No.

See, the debt is yet to be raised. For us, at this point of time, what I can call out is that it is pretty much in the range of doing 5% to 6%, but it will all depend upon the day we actually do the transaction.

You can right now assume between 5% to 6% on a net basis.

Thanks, Sandeep, for the clarification, and all the best.

Thank you for this opportunity. Sir, can you help me understand broad breakup of the $50 million the $5 million $50 million acquisition cost that you mentioned?

Which $50 million acquisition cost are you talking about?

Like the one-off acquisition cost that would be involved, right, like ₹185 crore.

Understood. Vinit, please go ahead.

Yeah. This 50 million is basically a combination of multiple.

It's a combination of the investment banking fees, the bridge loan commitment cost, there are legal lawyer costs. We are doing application of regulatory filings in various geographies, various travel involved with that.

It's a combination of all that put together that is being factored in at this point of time, plus some amount of funding that we are at Persistent right now planning to raise. All that put together.

Right now, around 19 to 20 million is what basically is incurred in Q2, and as I said, 25 to 30 million will be incurred over the next three to four quarters.

Got it, sir. Thank you very much.

Sir, if I may ask one more question. I know you answered on the TCV question a couple of deals got slipped into this quarter.

If we look at the year-on-year growth on TCV, it was just 4%, which typically is in the range of 15% to 16%. How should one look at that?

Yeah. You should look at it in the context that last quarter, we had a TCV of $1.14 billion.

Now, if you look at the growth from that perspective, it's fairly decent. I would tend to say, look at the TTM-to-TTM comparisons rather than a comparison of a particular quarter.

If you take a longer range, that is what would give you a fair comparison. If I look at the TTM year-on-year, the trailing 12 months, the TCV growth is 36.3%.

If I look at the ACV growth on a TTM basis, it is 21.9%. Some quarters are going to be fairly big, and some quarters are going to be average.

If you combine all of this, the 36.3% and 21.9% is fairly good, TCV and ACV respectively.

This is very helpful. Thank you.

Hello. Thank you for the opportunity.

My first question was around the large customer deal. I just wanted to understand around the commercials and the cost part that you said around the deal, which is basically you've taken up some of the products and you kind of would improve the cloud cost, the cost of people, and the third-party cost.

Just from the revenue commercials, I wanted to understand if there is any contingency upon probably if the use of the products fall at the customer's end. Is that also kind of involved or that's only on the upside?

Yeah. I would say it is an upside because if you look at it, any of the software vendors today, whether it is even the next-generation tool vendors like an Anthropic, OpenAI, Microsoft, Google, Amazon, anyone, all of these people would love for companies like us to have partnerships and adopt their tools and sell their software into our enterprise customers because we are a channel for all of them and that has been the way tech services has worked for long.

That is an upside for us that is not baked into these financials. These financials are more to do with the services that we are providing.

Sandeep, on the ACV that is booked or the overall deal value of 650 million, is there any contingency where it could drop for the period of six years in case of any performance-based contingency of it to be lower than 650 million?

No.

Okay.

What we have announced is on the lower end of the deal.

Right. And

There could be potential upsides.

Okay. Thanks.

Sandeep, the other one that I wanted to check about was the outlook for healthcare. I think this has been while the other two verticals are doing fantastically well for you guys, just wanted to check where probably I think you said that probably from Q3 onwards all of the verticals will start growing, right?

Just from a medium-term perspective, just wanted to have some color on the outlook for healthcare.

Yeah. I stand by the comments I made earlier.

Healthcare should start seeing growth. If you look at it, if I look at the financial year '25, there was a time when it was growing more than 50%, even touching 70% year-on-year.

If we look at it, again, we are a sum of parts. There are some dynamics in Healthcare, Life Sciences that made us step back a little bit, but there's good pipeline, and I'm pretty sure this will also grow.

As of this point in time, if you look at it, when, let's say, for example, in Q3, Q4 of '25, Healthcare grew at 52.6% and 33.6% respectively, that time Hi-Tech grew at 3.2% and 9.7%, Financial Services grew at 22% and 26.6%. I don't think you should read too much into this.

There are some dynamics which were there with respect to a couple of customers. They are more or less baked in.

You should see the growth coming in.

Right. Thank you so much for the answers.

I think, operator, we are at the end of the call. We can take one last question, and then we should wrap up with the closing remarks.

Hi. Thanks for the opportunity.

Congrats on the execution despite the headwinds on the macro. I think most of the questions been answered.

Just bookkeeping, in this quarter, there has been a concise system which got closed effective 1st of July. Vinit, if you can provide incremental growth from this.

Second, the intangible assets under development in balance sheet has further increased Q-on-Q, which has been 0.6% of this quarter's revenue versus 0.5% of last quarter revenue. I'm talking about incremental increase.

Is it more of salary-related cost of R&D team, or this is beyond salary, other expenses, if you can provide the nature of the same?

Vinit, I'll answer the first part; you can take the second part. On the deal that we did with the Estonia-based company, now that is basically a part of a vendor consolidation exercise at one of our larger customers.

We continue to grow with that larger customer that we have, and it is not one of our top five customers; it's beyond that, much beyond that. We are seeing a very healthy pipeline, and we are relatively hopeful of growing that customer much bigger.

That is as far as the Estonia deal and growth is concerned. Now, Vinit, if you want to answer on the other part.

Yeah. Sandeep, this is with reference to all our internal IP tools with reference to AI that we are developing, like SASVA, iAura, GenAI.

It includes significant amount of people cost, but also includes certain amount of tools and other expenses in order to look at the application and sort of provide the necessary services.

On a Q-on-Q basis, it can go up, you believe, in the forthcoming quarters as well?

No, it all depends. See, sometimes we are in the process of developing the new features associated with, sometimes that cost goes up.

I think so, this quarter, you should also factor in the part that we had also had the wage increments that came in along with it. That is that component also attached with it.

Okay. Thanks, and all the best.

Perfect. With that, we would like to close the call.

Thank you, everyone, for spending the time with us on the call today. We look forward to connecting with you again in three months' time to provide an update on our ongoing progress.

With this, we'll close the call today. Have a good rest of the day.

Thank you.