Thank you, Sandeep and would just like to take a moment to thank Anand, Sandeep and the entire Board for the trust and confidence imposed in me in my role as the CFO and also to all our senior leaders and fellow employees in our growth journey. When I joined the company, it was about $350 million company. Today it is almost $1.2bn+ run rate, so it has been a very satisfying kind of a period. Lot of intense activity . And I must thank you all, for all the valuable insights, insightful questions a nd many times keeping us on our toes and am sure you will continue to do that which is a very balancing role that you guys play. I am very happy and would like to welcome Vinit. He has been a good friend and settling down very well and am sure the company is in safe hands. So wish you all the best, Vinit and I hand it back to you, Sandeep.

Thank you, Sir. We will now open the call for Q&A session. We will wait for few minutes until the queue assembles. We request participants to restrict to 2 questions and return to the queue for more questions. Please raise your hand from the participant tab on the screen to ask any question. The first question is from Abhishek Bhandari.

Thank you for the opportunity. First of all, Sunil Sir, all the best for your future. It was really nice interacting with you and Vin it, welcome to the new role. Sandeep, my first question is on slide 13 of your investor presentation. You know, for the last 3 quarters, bulk of our growth is led by this healthcare account. 2 questions there. 1 - how much more growth potential do you see in this vertical and the large account, what has been driving bulk of the growth here or is it broad-based, if you can clarify that? And 2, how should we think about your Hi -tech vertical which has been kind of stagnant for the last 3-4 quarters? When do you see the growth will return in that, and what would drive a growth improvement?

Sure! As far as the healthcare segment is concerned, it is not just one account. It is a multitude of accounts that are responsible for the growth. So, rest assured, it is a broadbased growth. While yes, bigger deals do drive significant pa rt but at times, if you look at our journey, we have said it repeatedly, we have rebooted our healthcare vertical for the last 2 years. We have bro ught in n ew set of leaders in that and we are continuing to invest on an ongoing basis. So we are confident th at the growth journey will continue in healthcare and we have said this for the last several quarters as well. As far as the Hi -Tech segment is concerned, if you compare the Hi-Tech segment from an engineering perspective, we have done fairly well. The hi-tech segment comprises of various different things in that. If we look at our order book for this quarter itself, we are fairly confident that hi -tech segment will also grow. So , from our perspective, compared to the industry that we live in and we are a part of a much bigger pond. If you look at our competition, the hi -tech segment, the trend is pretty visible in other results as well over the quarters. We have done relatively better, we will try to do even better and I am pretty confident that will also return to a very healt hy growth. So, from our perspective, it will be a secular growth, led by healthcare lifesciences followed by BFSI and hi-tech and look, for several years, hi-tech took the lead. So, it’s going to be one or the other segment as a company, as a team. It’s basically going to be like a portfolio where we will continue to grow and sometimes one vertical will grow more than the other and sometimes the other. So we are fairly confident across verticals.

Thanks Sandeep. Sandeep, my 2nd and last question is on growth. You know, in the last quarter call you had said that you were aspiring for a growth similar to FY24 level with similar margins. Q1 has been on a very strong footing at 5.6% growth and incrementally, some of the peers which have reported so far are not talking about bad news worsening from here. So , should we think, given this strong start what you had at the start of Q1, there could be a growth outlook for FY25 which is better than FY24?

Abhishek, you know very clearly that we don’t give forward -looking guidance. All I can say is this, whether it was the covid times or thereafter, whether it was a bad macro or good, this is our 17 th sequential quarter of growth. As a team , we are committed to delivering our best. We have delivered a fairly strong starting run rate and the journey w ell-started is half the journey done. So let the quarter pan out. We are confident of delivering good growth and as I have said before in the prepa red comments as well, while our margins came in at 14 % from an EBIT perspective, we have very clearly set our aspiration and that is to deliver the 14.5% or so that we delivered the last full year and we are at it. We’ll let the rest pan out.

Thanks Sandeep and all the best for fiscal 25.

Thank you. The next question is from Mohit Jain.

Sir, just one question on margins. There were lot of one-offs in this quarter. So in Q2, how do you see some of these one-offs reversing potentially and the impact of wage hikes that we should build in for 2nd quarter?

Sure, I will make a high-level comment and I will have Vinit answer the rest. If you look at it, in any business, there are always going to be puts and takes. So, if you look at what we said in the prepared comments, so we said, for the last several quarters, we have been looking at benchmarking our policies whether they are employee compensation and benefits, whether they are things like how do we depreciate our assets etc., we involved a 3rd party consultant to benchmark us against the best in class. If you look at our long-term incentives, things like ESOPs etc., we are the best in class. So we need to make sure that as we have grown from being a half a billion dollar company 5 years back to a run rate of $1.2 billion and we are competing increasingly with the best in class, tier 1s from India, tier 1s from global, we need to benchmark ourselves. So we have re -adjusted as we started this financial year, some of our policies which will give us a one- time gain in some cases and a one -time hit in some cases, so there are going to be some one-offs on that. And structurally, there is going to be a re-adjustment of the margins going ahead on some of the things that we change. Similarly, on the M&A side, wh en we do an M&A , as Vinit explained, we build a business case. The business case is built on upfront money that we give, a certain amount of earnouts, which are linked to the revenue increase and the margin s being delivered , and all of this is factored into the P&L. Now either these companies perform jointly with us in terms of synergy revenues and hence we see the profit and revenue go up or if that doesn’t happen, then obviously we have to claw back whatever was supposed to be the earnouts so that we are being good to the companies that we acquired but we are also managing our P&L. So there are always going to be puts and takes, sometimes one -offs will also come but we are pretty confident, even including salary, wage increases etc., we will deliver a healthy margin for Q2 and by the time we exit the full year, our margins should be at a level where we should have come to the full year, aspirationally, at the same level as the last year and set the run rate for margin improvement for the years to come. Vin it, please give more color.

Ya, so Mohit, couple of things in addition to what Sandeep said. One, you know, the growth will itself take care of a lot of the margin issues. The 2 nd part, while this looks to be a one-off, you will also have to look at the fact that there are 2 aspects to it. One, some of these costs don’t get recurred and hit our P&L on an ongoing basis. Two, the rationalization of some of the compensation and benefit doesn’t happen in one go. It happens over a period of time, depending upon the geography and depending upon the regulatory framework from which we are doing that alignment. So we have couple of other things that will also pan out during the year and have a benefit coming into it. The 3 rd, as I mentioned in my opening comments, there is a cost optimization program that has been launched, whereby we are focusing on improving our operational efficiency. That program kickstarted in Q1. Some of the benefits, we already achieved in Q1 but the larger benefits will be com ing up in the subsequent quarters. When we decided to make a change and give increments to our people, we had all factored in some of these headwinds that were going to come but at the same time, we were also going to get a lot of these tailwinds through some of these initiatives that are already ongoing. We are pretty confident, at the end of the year to not only at least meet our FY24 margins but probably even exceed it.

Depreciation is the new run-rate, is it?

It is going to be new run -rate. So there is one adjustment that has happened for the quarter but this is going to be a recurring reduction in our depreciation and amortization.

Okay. And last on subcon, this number was very high for this quarter. Now should we expect , and this is also a one time, or do you think this will sustain the few quarters and then come off as part of natural growth?

So, see subcons are basically taken into consideration to do a quick ramp up. Eventually, over a period of time, there is a plan being put in place whereby the se subcons will get replaced with our own employees. But that's a structured plan. At this point of time, more important factor is that growth is on our table. We want to capture that growth and eventually the impact of that higher cost rounding into our own FTEs and reducing our cost and improving our margins will come into play over a period of time.

Thank you.

Thank you. The next question is from Suraj Malu.

Thank you, sir, for this opportunity . I had one question , can you just help me understand with an example, what does Starfish do, like, just a use case to understand in greater detail?

Perfect. So, Suraj, Starfish basically has a platform which can help manage multiple different contact center technologies in larger, let's say fortune 500, kind of an organization. You know, there's a percolation of, let's say Teams on this side and Avaya, Genes ys and others . So, on one side, you have to manage multiple different technologies that can come into play through various acquisitions or organic system builds in different parts of the organization. On the other side, they also have the ability to migrate to the latest technologies like an AWS Connect and so on and so forth. So, the play for them so far has been managing multiple different contact center technologies, modernization of contact centers, etc. to provide better customer experience and enable business models. Where we are going to focus with them is on integrating things like Google Contact Center AI and even accelerating the path to things li ke AWS Connect and so on and so forth. So, for us, it's a much bigger play taking the technology that they are bringing in, building it along with our partner IP, whether it's Google, AWS or Microsoft, and helping our enterprise customers leverage the power of Gen AI as it unfolds.

Got it. Thank you.

Thank you. The next question is from Dipesh Mehta.

Thanks for the opportunity. A couple of questions. First, about the employee policy change, which you referred to. Now attrition seems to be a slight inch-up. So, if you can give some sense about attrition and some of these policy changes, how employees are taking it in terms of their overall compensation and related implications? The second question is about Hi-Tech. You partly alluded to it in terms of engineering segment did well, but overall performance was still weak . So, if you can help us understand which area is seeing a headwind leading to muted revenue growth for the last few quarters? And Salesforce also, you partly touch ed upon how in terms of where headwind were there particularly in Europe ? So, if you can give some comments about how Salesforce Ecosystem is playing out for us? Thank you.

Sure. So, I’ll start the reverse way and then I'll also have Vinit help me with this. So, on the Salesforce part, look, the issues that we have in Salesforce in Europe are our own. I don't think it is linked to Salesforce as a company or Salesforce as a segment . So, when we acquired the companies, if you remember there were two companies that we had acquired, one at $13 million in revenue, one at $6.5 million in revenue. All these acquisitions are in the last 5 to 7 years. Now, obviously, with them, we acquired a certain customer base because at that certain revenue base, their customer base comprised of companies large and small. All we are trying to do is to slowly, as the contracts come up, we are trying to basically rationalize the long tail. We are not trying to renew the contracts where, you know, the contracts are much smaller, companies don't have the propensity to grow with us and so on . So, there’s a certain amount of rationalization that we have been incrementally doing over the last four years . So, that’s as far as Salesforce Europe is concerned. And our endeavor is to grow accounts at a profitable clip , a ccounts that have a propensity t o become bigger accounts for us across multiple different service lines and so on. So, that is the part in Salesforce in Europe . Our Salesforce business across the US or in India or APAC broadly, which includes Australia, is growing fairly healthily. So, if I look at the net Salesforce business for Persistent, going very well, these are adjustments that we need to do to take care of our own profitability and growth ambitions in the right way. The second part, you talked about the Hi-Tech side. So, look, Hi-Tech is an interesting market when the macro goes up or down, now the enterprises don't invest that much in a bad macro in buying newer software licenses or, you know, implementing more modules, etc. that basically impacts our customers and their ability to invest. And of late , we have seen some amount of green shoot in that. Plus, we have also doubled down with our platform play. Our platform play with SASVA is being taken in a very positive manner, especially in the private equity enterprise software intersection. So, we have seen some green shoots, we have booked some good orders, and we are fairly reasonably confident that Hi-Tech, which had been traditionally a very good growth engine for us, will also become a good growth engine for us going ahead over the next several quarters. Now, in terms of the employee attrition, etc., the employee attrition went up a little bit for us. It's a combination of two things. One, you know, the market environment, which I would say is relatively stable, just a little bit green shoots emerging there for some of the providers, not all, as you may also have seen. Second part is where we are optimizing, where if we are looking at our own talent pool, and if we look at our talent pool and see the people who are not being able to be deployed over a number of quarters, then it is upon us to make sure that we are optimizing. If we cannot give someone a career path, they are better off going somewhere else and having a career path somewhere else. And so, we are on that journey where we have made sure that we have optimized for cost, put money where our growth is, that's where our utilization has also moved up. And partly that has also led to a little lower margin, if I may say so, in the last quarter, because whatever rationalization we have done, whatever severances we have to pay, we have baked that in. And that's also a margin lever for us going ahead in Q2 and beyond. And the policy changes that we are doing are nothing that hit the basics of the employee compensation. These are, you know, to balance, where on one side, we are giving employees the employee stock options, which have a fairly good upside for them and wherever the policies are archaic, we are taking that out . So, that’s there. Vinit, if you want to add anything to it, please.

Well, just two things. When we look at compensation and benefit, we look at it in a holistic manner, not in a each component manner. When we look at our overall compensation and benefits compared to the industry, I think so our average compensation is far better than the industry. Second, as Sandeep rightly said, it includes employee stock options, which has been given to a pretty large population in Persistent. We are one of the best in class whereby we have given the stock options. The third aspect is also to look at the fact that we are one of the few companies who has rolled out increments well in time. So, you know, people also welcome that perspective when some of these initiatives are being taken into consideration.

Thank you. The next question is from Rishi Jhunjhunwala.

Yeah. Hi thanks for the opportunity. A couple of questions , firstly on margins. So, what are the wage hikes that we have decided and when is it going to roll out? And just in terms of the initiatives that we are taking to optimize cost, is there kind of trajectory that we can build in, in terms of which areas are going to see benefit from that over what period of time?

So, wage hikes while I don't want to call out the specific number, it is pretty much in the range of what the typical industry hikes have been given at this point of time, which ever companies have rolled out , our wage hikes are pretty much in line with that . And typically, you would anticipate the impact on profitability anywhere between 150 basis points to around 200 basis points. Now, that will get offset by a couple of these cost optimization measures that we have talked about. One, utilization obviously there is , while we have improved it in this quarter, there is some further scope to do utilization improvement. Second, we are doing a lot of right-shoring. So, all these ramp ups that have happened on onsite in the beginning of the current year, those will get sort of right-shored over a period of time . So, as a part of that , that will come up as well. The third portion, we are also looking at our SG&A spend. We have invested sufficiently in the last couple of quarters. I think now we have reached a stage whereby our growth momentum can continue without making any incremental massive investments into SG&A.

Thanks. And just a second question on revenues. Right . So, clearly you know, such strong revenue growth is also a function of the large deal ramp up that is happening, which is reflected in increased subcon costs as well, which is probably mostly onsite . S o, there will be a shift that will start happening from onsite to offshore once the deal ramp up is kind of stabilized. So just wanted to understand, how many quarters do you think, after which it will start happening and whether should we expect any kind of deflationary pressures from that which will be difficult to offset, say, in the second half of the year?

So, Rishi, look at it this way, the deflationary pressure will come if we don't have a strong order book quarter-on- quarter. So, the way we are looking at it is, the deals that we have booked , they will have an impact in terms of offshoring over the next several quarters. It's not a bulk of it happening in one particular quarter very soon . So, these are things that take place over a period of time. And the fact that we have been booking very good, order wins on an ACV basis, it basically will supplement the growth that we need to have. So, net-net we are confident of growing healthily between optimizing and the New Order book. So, I don't think we should be worried about it.

And Sandeep, this ramp up is still ongoing or we have kind of matured in that, just trying to understand, whether it still has 1 or 2 quarter runway?

So, look, the fact is that this is not one customer, one large deal. This is multiple customers, multiple deals within that. Within which there may be customers, where there are multiple large deals. So, I would say a significant part of the initial set of large deal wins have been ramped up. There is still more headroom for us to ramp up and then our endeavor is to continue winning deals, whether in the same vertical or the other verticals. And as I said, sometimes one vertical will take leadership, sometimes the other. So, overall, I do think the growth journey will continue.

Okay. Thank you. All the best guys.

Thank you. The next question is from Kawaljeet Saluja.

Hi, Sandeep. Fabulous revenue growth performance. Congratulations! You know let's talk about something which is a little bit what I would say tad disappointing, which is on profitability. Now, if you look at the underlying EBIT in the quarter, Sandeep, it stands at 9.5% if you remove those you know, earnout provision reversals, etc., and this is even before wage revision. Now I'm just trying to understand what are the nature of contracts actually, which has brought down the underlying EBIT margin to 9.5%. T ypically, strong revenue growth is associated with margin improvement but of course, I understand that there are idiosyncratic contracts. I'm just trying to understand the true profitability of the new incremental business that you are winning.

Yeah. So, Kawaljeet look, again, as I said, there are always going to be puts and takes and there are puts and takes that you take knowing fairly well how the entire P&L is going to pan out. And so, from our perspective, there are order wins that we have done where there may be transition costs involved. And there are always ways and means of booking the transition costs upfront if you want to. And some people do defray the costs of transition over a period of time and so on. So, without going into too many details, there are seven minutes in this call. I would say the way you are looking at it, may be one way of looking at it, but if you look at the overall profitability of the business, the levers that we have talked about, whether it is offshoring of certain of these large deals and not just one account, these are multiple deals, multiple accounts. The deal wins that have panned out with offshoring, that will happen. And then there are the cost initiatives that we have taken on ourselves and we have also booked some cost in terms of severances, etc., in Q1. And so, if you put all of these together as operators of this business, I can say with confidence, we know that we are headed into a year where we will optimize margins despite wage hikes, and by the time we exit our run rate exit should be pretty healthy and our full year should be more or less in line with what we delivered last year. Rest, I will let the time pan out.

No, I t ake your point, Sandeep at the end of the day, you have to take a portfolio call, but just persisting on this you know, see, essentially some of the things on which you're getting benefit, like, let's say, reversal of earnout provision. It would not be there next year. Right? So, I'm just trying to understand what's the true underlying nature of profitability ? I mean, you know, you've basically stopped, let's say te nure-based incentive plan on stock options for employees. So, again, there's a lumpy tailwind, right , which will not recur. I'm just trying to understand what are the true underlying profitability in FY25, as such ? I understand the call on the business and portfolio.

Right. So, let's just take your example in point . So, when we swap one compensation benefit for the other, so, while there is a lumpy gain on one, there's a lumpy cost on the other. The cost on the employee stock option plans, if you understand how the employee stock option plans are run, there is higher upfront cost, and we have been one of the best companies in terms of, best coverage of our employees, which we rightfully have a need to do because we are one of the best performi ng companies . So, when you give a broader based employee stock option plan, the hit in the first few quarters or the first year is the highest. Now, if you are swapping in the benefit for ESOPs with an archaic benefit which you have to accrue and has no meaning, it is a prudent call. It is not to be just looked at one on one side and the other on an absolute other side . So, it’s basically netting off, if you net that off, we are good. So, I think devil is always in the details and I wouldn't want to bore 300 people on an earnings call with the details. So, we can have an offline discussion. But I'm pretty reasonably confident the underlying business profitability is fairly good and as I said before, we have taken certain calls which are important to optimize our costs. And when we are optimizing for costs on the employee front, we have severances, which we have paid in the first quarter. So, puts and takes 14% we have delivered . 14.5% is what we delivered last year. Our endeavor is to get full year to that, and you are also here, we are also here, we’ll let it pan out.

Now let me add two things Kawal, to this. One, yes, if the earnout credits are not there on quarter on quarter , but you look at the fact that if the acquisitions that we have done , pan out to the way we are anticipating, they will get reflected in both our growth as well as on margins. Second, you have to also look at that some of the , when we do the rationalization of employee compensation and benefit, some benefits come up in a quarter, but you have to also look at the fact that there is a recurring cost that is avoided from a future perspective. So, to that extent, my forward-looking cost has also come down. Third, these programs that we have launched, we started, as you know, any growth or cost optimization program that gets started, in the initial phase, you only get partial benefits, while the cost associated with launching that program and executing that program is much higher . The subsequent quarters, the cost sort of gets rationalized, but the benefits are much multifold. So, you keep that in mind, we have done our own analysis. If we go on the growth path that is being achieved, we are pretty much confident that we will be able to achieve the margin trajectory that we are anticipating.

Okay. Fantastic. Thank you so much. Vinit, you know there are some rough edges, which I'll just clarify with you maybe post the earnings call. But thanks a lot for the detailed explanation both Sandeep and you.

Thank you. The next question is from Sandeep Shah.

Yeah, thank s for the opportunity, Sandeep wanted to understand if the 5.6% growth was in line with your expectation at the start of the quarter, or because there are higher on-site efforts also which might have led to this? And is it also the pass -through sales being higher because the software license cost has gone up to 7% from 5.8%? And if it is higher than your expectation, is it led by a pickup in the discretionary IT spend? That's question number 1. Question number 2 is an extension to a previous question . T he margin heavy lifting might have to be done in the second half versus first half. And we are expecting a healthy run rate on EBIT margin in the 4th quarter. So, is it fair to assume the 4th quarter EBIT margin would be a long -term sustainable margin, or will have also some one-off, which may lead to a tight margin walk again in FY 26?

So, there is a bulk of questions in that, and we have two minutes in the call. So, I’ll go rapid fire and we can follow up . So, in terms of the margin, look, by the time we hit the Q4, the margins that we will have are sustainable long-term margins. So, that is the endeavor, that is the entire effort. And we are fairly confident we have a full plan in place, and we'll execute it. Second part of it is the ramp up, or the 5.6% growth in the first quarter was in line with our expectations or higher than our expectations. Look, our business, it's very hard unless you have, you know, pass -through revenue scaling up to change things at the last minute. And the pass -through revenue is not what is the reason for this . So, if it is a traditional business scaling up on the back of multiple large deals in multiple large customers, scaling up, that's what it is. And so, it is fairly predictable. And so, we pretty much know by the middle of the quarter where we are going to end in the end of the quarter because we are building on or executing to the order book we have had , our in -quarter book, and bill is relatively smaller as compared to what we deliver from the bookings from last few quarters, So rest assured, it's not by accident, it's by plan, and it's not based on passthroughs and so on. Now the discretionary spend coming back, look, I have always maintained, despite many of the analysts believing or self -believing that Persistent is discretionary spend-based. We have come a long way in the last 15 years or so. Today, we are winning against some of the bigger providers. We are doing vendor consolidation, including consolidating some of the bigger providers. And it is both a build and a maintain kind of a work , cost optimization kind of an initiative where we are more and more invited to not just new bids. So, so rest assured, discretionary, no discretionary , it is more execution discipline that is getting us this and the muscle that is being built in that. So, with that, I will stop. I think we are out of time. So, moderator if you can please close the call . From our perspective the only other thing I would say is we have started FY25 on a positive note. We are confident of our growth trajectory. We are confident of delivering the margin trajectory and we are confident of our customers scaling with us. With that, I will once again thank all of you and our 23,500 plus team members. We look forward to providing you an update in the next three months’ time and connecting back with you. Thank you.

Thank you.

Thank you very much to the Persistent management . L adies and gentlemen, on behalf of Persistent Systems Limited, that concludes today's conference. Thank you for joining us and you may now disconnect your line and exit the webinar. Thank you. ****************************************************************************** Please note that this transcript has been edited for readability.