The first question comes from the line of Vibhor Singhal with Nuvama Equities. Please go ahead.

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

So, let me start with a little bit of color on the healthcare BPaaS engagement itself. The thing to bear in mind out here is that there was a leadership change that happened at the client ’s end. As you might be aware, this is not uncommon, you know, when leadership changes, priorities shift. Decisions of this nature, which are often transformational, that might have been made by the previous leadership, may often get unwound and they might choose to stick with what might have been the status quo. So, while the client in this case was looking to transform and modernize the way they run their operations, including implementing a new technology platform, the decision on the part of the client in this case was to continue to maintain the status quo, despite the fact that they were at a fairly advanced stage in terms of completing the implementation itself. So, it is in some sense a client -side decision, not a reflection of our delivery, which actually has been very strong, and one reflection of that as I provided in earlier commentary as well. This client continues to grow meaningfully with us. It's a strategic logo. We do upwards of US$5 million of annual revenue. We've added more work with them recently. So, we feel pretty good about our relationship, despite the fact that this particular program has wound down. Specific to the 271 million charge itself -- the way to think about it is that, this program was a complex program. It required working with a set of partners in the ecosystem to deliver the outcomes that the client was looking for. As we were working towards the implementation of th e same itself, there are a set of deliverables that each of these vendors had provided as part of their obligations. We are working very closely with the client to ensure that we are able to recover those obligations that those vendors committed. And since we were the single throat to choke, we are also making sure that as we collect those amounts, we are then able to also repay our obligations to tho se partners. We feel comfortable in terms of how the interactions with the client continue. And as I provided you color earlier that, we continue to expand our footprint with the client organization itself. So, we feel comfortable about being able to recover these outstandings. And from our vantage point, we did think it was important to be conservative and provide for this since it was an outstanding amount that was there, but at the same time, we feel good about the fact that we will be able to recover the amounts itself.

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

Yes, that's about right.

Got it. And related to that, Ritesh, how should we read the maintenance of the guidance despite this hit? Do we now assume that earlier we might have come closer to the, maybe the top end of the guidance and now we'll probably end up at a slightly midpoint or below that of the guidance? Or do you believe the pipeline that we have is good

enough to compensate for the kind of loss that we are facing from this contract, and numerically we might actually be at the same point that we started the year with?

Yes, I think what you just surmised right at the end is where I will leave it at. But I think the key thing to bear in mind is we had a very strong quarter in terms of pipeline wins. This has been the best quarter that we've had in the last 4 quarters in terms of new deal wins from a pipeline standpoint. And several of these deals are actually ramping up in quick order. So, we think that that provides a strong offset for the 1% to 1.5% that we feel potentially comes off because of this particular client program winding down. And because of that, we do believe that it gives us adequate comfort and confidence t o reinforce the guidance, and at the same time, the current pipeline as it stands continues to remain healthy despite the deal wins. So, that gives us comfort also to going out there and supporting the guidance itself that we had earlier provided at the beg inning of the year.

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

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

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

Thanks for the opportunity. Just first question is on the mortgage business. We have indicated MLM model which we have launched. Can you give some sense about, let's say, how many clients might have adopted it? And what kind of traction you are seeing in the mortgage language model so far?

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

Okay. Second question I think on continue with the exceptional items. Now, there are three point which you mentioned. Third is related to transaction or acquisition, but first two, whether it reflect the same client or it is a different client? Second is related to let's say if I go to the ramp-up plan which we announced at that time of signing that deal, in 24 months, we expected it to reach to steady state, which in a way we implied USD50 million run rate kind of thing on annualized basis. Now, the number which you indicated, let me say 1% to 1.5% impact, which is reflecting it is not reaching to that kind of point. So, if you can clarify that part. Second related question is the I think earlier question you answered; this is relate some of the provision which you made is related to partner- related payment because we are the single point of contact and partner -related deliverable is what we have provided for. In addition to that, let's say whatever revenue which we might have booked in the prior period, whether there would be any kind of reversal happening because of the termination of contract, or we have collected that amount fully so far for our revenue perspective?

So, Dipesh, as far as the revenue and whatever we've accounted for, all money has been received or going to be received. So, as I said in my commentary, that first phase of resolution, we already collected those amounts . There are still some unbilled revenues which we are going to collect and going to bill because those are in a very normal course where we have to charge them on a licenses fees and things like that. So, there is no doubt on those money not to be received. The only question comes, which Ritesh was explaining, because these are a multi -partner ecosystem where we have to pay to the partners and we have to then recover. There are some places, those may be a challenge, and that the reason, on a prudent and conservative basis, we provided this amount. But contractually, these all amounts are recoverable. And as you're aware that this program, as Ritesh was mentioning, going to go live very soon, and we have all indication contractually that it was running on a track and everything around. So, we don't have a doubt on those, but the accounting is very different where you have very certainty on some of the cases, and that's the r eason we have to provide for these amounts.

Dipesh, I think the other question , while we talked about two exceptional items, one which I think I covered in adequate detail in the earlier question that Vibhor had asked. The second exceptional item is pertaining to a different client. It's a one-time settlement of a commercial dispute in our healthcare operations arising from a specific claims processing issue in a prior period. The underlying process has since been remediated. We are pursuing recovery under our professional indemnity insurance. It is isolated and specific, not a pattern across our operations or client base. We've recognized it pur ely as an exceptional item purely because it's non -recurring and also not reflective of our underlying operative operating performance. What I think should also give everybody comfort and confidence here is the fact that this client continues to expand their book of business with us. It's a substantial client for us in terms of our footprint, and we have very solid relationships with all t he stakeholders. In fact, just in the last quarter s, we continue to expand our book of business with them, and that gives us a high degree of comfort along with a very strong pipeline in that account.

And just on the last part, in terms of we indicated USD50 million run rate, if let's say by H2 we intend to reach there, 1%-1.5% seems to be lower than the implied trajectory of that deal ramp-up. So, can you provide some clarity around it?

Yes. So, one of the things to bear in mind is that the 1% to 1.5% is what we had anticipated would be the contribution from this particular client program right in our estimation at the beginning of the year itself, and that was primarily because as you're aware, any complex program implementation, technology platform change, etcetera, has a certain time period from a schedule standpoint that it takes to get done, and we knew that this program was going to take time and effort.

The leadership change only further, I would say, compounded the delay, and then the decision on the part of the leadership to say let's take stock and perhaps not do this at all. So, from our vantage point, we had never anticipated that this current fiscal year would end up having the number that you're referencing. It was only 1% to 1.5% of the total revenues that we had anticipated, and that we feel very comfortable in terms of being able to offset that with the new deal wins that we've had.

Understood. And last two questions. One is on the guidance, can you give broad thought process on lower end and upper end, what we have assumed, and second question is on the segment margin. If I look our segment margin, now and I'm comparing FY24 versus where we are in Q1 FY27, so roughly two, two and a half years journey, there is a significant deviation in margin profile in some of the segment. BFS, which used to operate around 15 -odd percentage segment margin, is now upwards of 20%. Healthcare, which used to be mid -teen-plus kind of margin, now it is low double -digit kind of number. Similarly, CMT. Can you give some sense, I understand some of t he acquisition happened in the past couple of years, might have some ramifications in trajectory, but do you expect we can go back to let's say where we used to operate in some of the vertical where margin profile has deteriorated? Thank you.

Yes, let me address the comment that you had on the guidance itself for the year and what gives us comfort. So, as you know, when we provide guidance at any point in time, we do it with the with a very clear line of sight to the lower end of the guidance and with a strong pipeline which reflects how we anticipate getting to the upper end of the guidance itself, along with the deal wins, the pace of ramp of those deal wins when they convert into revenue, and what that might mean, as well as existing client expa nsions and so on and so forth. The quantum of the deal wins that we've had in Q1 gives us comfort, along with the fact that several of those deal wins are going to ramp quickly, allows us to support the 10% to 13% guidance that we've provided at the beginning of the financial year itsel f, and that therefore we see no reason to look at it any differently. If anything else, the fact that our pipeline continues to be very robust gives us comfort that we can continue to guide to that range itself. Specific to the margin question that you had, I wouldn't read too much into one quarter over the other. These are standard aberrations that would happen. What I would look at is over an extended period of time is there a is there anything which is systemic . Because what does what could end up happening is in a in a particular quarter, if you have a set of clients that might be ramping up, that could in turn, there could be a cost of growth associated with those ramps, which reflect for that particular segment itself, and therefore, might dilute the margin for that particular quarter, but then it automatically trends upwards the subsequent quarters, and so on and so forth. So, nothing in our mind suggests that there is anything to read into that. At the same time, as you can see at the company level, this has now been our seventh straight quarter of margin expansion. If you just take the last eight quarters, we were at 11% eight quarters back, we're now at 12.4%. So, you're seeing a consistent trend upwards in terms of the margin play itself. We continue to believe that the 50 to 75 basis point thesis that we'd talked about I think way back when I had joined continues to hold true. We've delivered on that consistently so far, and you can also see from the guidance that we've provided at the beginning of the year for this fiscal, which was 12.25% to 12.75%, at 12.4%, we're already ahead of the lower end of the guidance.

The next question comes from the line of Vamsi Krishna with Kotak Securities.

Hi. So, I have two - one for Ritesh and one for Dinesh. So, Ritesh, this is related to the second exceptional item where you had a dispute with the client. Now that the BPO industry is undergoing a transition from FTE-based to outcome-based projects, at least during this transition phase, do you expect some disconnect in terms of delivery while the broader industry adapts to a new mode of engagement?

Vamshi, it's a very good question. What I would anticipate is that having a very strong domain orientation will become a prerequisite to be able to offer non-linear commercial models itself. So, I think in some sense, there will be divergence in terms of players who don't necessarily understand the nuts and bolts of a particular sector, and it's not enough to have revenue. You might have 30% revenues coming from a particular industry and yet not know the domain. So, I think the ability to know processes at the second, third level of detail is what is going to differentiate the folks who are able to transition this smoothly. We feel good about that. You are going to occasionally end up running into in any transaction process, you will end up running into the occasional error here or there, that could be there. That's the nature of the beast, if you will. And I think the key from our standpoint is to ensure that the requisite degree of controls commensurate with the risk is attributed and ascribed to every operation itself, which is why in our minds this is a one -off, and that's the reason why we continue t o see expansion with this particular client from a business perspective itself.

Understood. And then, Dinesh, just on the hedge losses, I think there was around $25 million of outstanding hedge liability that you had -- that you were carrying from your forward contracts as of last quarter. Can you share what that number would be now, and how that would play out over the next three, four quarters?

Overall, if you ask me, the pound side normally we carry 50% to 75% of the committed books for year one. And the dollar side, the books are around 25% of the committed value. So, it's not a large number from a dollar point, but pound point, as you know that historically always, we have a long-term which we carry. And that the reason you always have larger books come into the play. For a current year as of June 30th, we have got almost a GBP61.6 million GBP which we have next 12 months, and dollar book is around $119 million. That's the two hedge books which we are carrying.

And what is the average rate for this?

So, average is for pound is between 118 to 120, and for dollar, this is around 93, but we got some of the option product which is like a buying a pure play put option, so you don't have a downside coming, but you have always upside open for some of the hedge portion. So, around 25% or 30% of the portfolio do have the option, which can fetch me current rates of around 125 to 130. So, those products are also in there. So, I believe the average rate for pound you can consider, if you're doing some math around, maybe around 123 to 124 on an overall portfolio, and for dollar it should be around 94.

The next question comes from the line of Girish Pai with BOB Capital Markets. Please go ahead.

Yes, thanks for the opportunity. Ritesh, last quarter, you unveiled a new positioning for the company of being a full-stack intelligence operator vis-a-vis the UnBPO player that you were previously, and you talked about a TAM which is, if I remember correctly, some 7x of what you were addressing previously. So, when has that started showing up in the TCV numbers or in the pipeline? Or when do you think that larger TAM is going to get reflected in in growth?

I think it's already playing out, Girish. So, thanks for the question itself. So, let me provide a little bit of a flavour of what we intended to do with 'Intelligence That Operates' when we launched it, and we branded our agentic operating system there as Kairos, which is the Greek word for the gap between promise and reality, and we felt that that was important to as a practitioner to help operationalize AI in client en terprise environments itself. What we also said was going to be critical is this shift from being a services business to being a services -as-a-software business, and part of doing that is to actually have productized capabilities itself of what we're taking to market. What it also mean t was that we needed to be a full -stack operator, somebody who advises clients as a

practitioner, but doesn't just advise, goes ahead and implements, and implements not just operations, but also technology, and not just implement, but also run, and not just run the operations, but also transform. If you'd asked me this question three years back, we would have probably been slotted for the run and transform side, not so much on the advice and implement side. I think that that is one of the areas that we're seeing a significant amount of opportunity that is there. Let me give you a few examples of that. Today for one of our clients, we're doing a lot of work on the marketing technology stack. Two years back, we wouldn't have had that from a capability standpoint, but the client entrusts us with what we're doing out there. For another client, we're doing a lot of work on the pen -testing side, which is on the security services side, to ensure that their operations are going to be secure in an agentic AI world itself. Part of that pen -testing is work scope is also doing work o n the red team testing, doing ensuring that the models do not drift. These are all new revenue streams that are starting to evolve as clients are looking to practically implement the same in a production environment itself. The third example that I would give is a client where we did the entire customer journeys, and the customer journeys were done on the back of what K airos has from an IP perspective, which is the domain harness. For every workflow that they have, we were able to bring in the context of their own data, which takes in information from multiple signals, including process mining, task mining, conversational records, call intelligence etc., to actually show them areas where there might be fault lines in the way they run their operations itself. The ability to bring all this together allows us to go ahead and transform the way they run their operations, and we've been able to do that in an outcome -based model. Very different conversation than, again, what would have been a discussion even three years ago or four years ago. So, I think the market is starting to recognize that these are very differentiated discussions. There's a lot of flesh and bone behind this, and I think that's what's allowing us to hold our own and continue to win logos. The best manifestation of this is our deal wins this quarter has been the best in the last five quarters. We continue to on a steady state win anywhere from 10 to 15 logos every quarter. Some of the new logo wins that we've had have been greater than US$5 million right at the outset, where you're displacing an incumbent. So, I think those are proof points in terms of the fact that these propositions that we're taking to the market are differentiated. The TAM that we are getting called for, or the surface area that we are playing, is wider than before.

Okay. My last question is regarding revenue growth picture across the next three quarters. You think it's going to be like smooth, or it's going to be like month -loaded towards the end, or how do you kind of foresee revenue growth kind of playing out over the next three quarters?

We do believe that some of the new wins that are there will take the next three -odd months to continue to ramp up. So, we do expect the second half of the year to be strong, but at the same time, I think, it's broadly going to be in line with our ability to hit the guidance that we've reinforced.

Thank you. Ladies and gentlemen. I would now like to hand the conference over to Mr. Ritesh Idnani for the closing remarks.

Thank you all for joining the call and for your questions. I just want to close with a few final points. Our sales engine continues to work well. We had four large deal wins in Q1, our sixth straight quarter of four or more large deals, as well as the larg est ACV deal wins in the last four quarters. Our deal pipeline continues to remain healthy. Our execution is on track. We are executing well on improving our margins, as you've seen where our margins are now at 12.4%, which is the seventh straight quarter of margin expansion.

Regarding the exceptional items that we talked about, those clients continue to grow with us, and we feel very comfortable with the pipeline as well as the wins that we've had with those clients. Our long-term aspirations continue to remain intact. We see our constant currency revenue growth for FY27 in the 10% to 13% range, and we remain laser-focused on taking our EBIT margin to 14% to 15% band over the next two to three years. That's all from our side, and we look forward to interacting with you again in the next quarter call.

Thank you, sir. Ladies and gentlemen, on behalf of Firstsource Solutions Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.