Happiest Minds’ operating margin has been above its guidance of 22-24% for a straight 15 quarters, MD & CFO Venkatraman Narayanan told FE.
The Bengaluru-based IT firm on Wednesday reported a revenue of Rs 409 crore in the third quarter of FY24, up 0.8% sequentially. However, its margin has slightly fallen for the last two quarters after reporting 25%-plus Ebitda (Earnings before interest, taxes, depreciation, and amortisation) margin for 13 quarters in a row till Q1FY24. The company’s margin came down to 24.2% in Q3 from 24.4% in the second quarter.
Venkatraman said, “Our utilisation has come down from the traditional 78-79%. Today it is 1% more than last quarter because of the campus hires that we made. When you try to broadbase your pyramid, you also come across the need to make adjustments to your utilisation.”
The IT firm saw attrition falling marginally by 30 basis points to 14.1% in Q3. While the total headcount fell by 39 to 5,246, its utilisation increased to 76.7% in Q3 from 75.6% in Q2.
The second key factor in Q3 was the pay hikes to employees. Happiest Minds rolls out pay hikes in two stages: 70% of the employees get it in the second quarter and the remaining 30% in the third quarter. “We had to make the second part of the pay increase, which is about 30% of the total pay increase, and that has also impacted margins this quarter.”
The third factor, he said, is the investment the company is making in the generative AI business unit, set up in October last year, whose revenues will only be called out from April 1.
Speaking about campus hiring at the company, Joseph Anantharaju, executive vice chairman, said, “We had around 200 people join us in August-September. Another 100 will be joining us in January and then we have another 100 people joining us in April.”