LTIMindtree on Wednesday reported a sequential increase in its revenue and net profit for the quarter ended June, driven by deal ramp-ups and a rise in digital spending by clients. However, while the topline exceeded estimates, the bottomline slightly missed Street expectations.”While the environment remains unchanged, fiscal 2025 started on a positive note for us…This is attributed to a measured uptick in IT spending for critical initiatives with clients balancing innovation and fiscal prudence,” Debashis Chatterjee, chief executive officer and managing director of the company, said.The consolidated revenue rose nearly 3% quarter-on-quarter to `9,142.6 crore in April-June. This is also higher than the Bloomberg estimate of `9,075 crore.

The company’s management also said they expect to see this positive momentum in the second quarter of FY25. “We are seeing promising, though early, signs of recovery in demand. We expect the momentum to continue in Q2,” it said in the post-earnings press conference.An increase in revenue also boosted the operating margin, calculated as earnings before interest and tax (Ebit). The Ebit margin rose by 30 basis points sequentially to 15%. Additionally, the management said they are continuing to work towards their aspirational margin range of 17-18%.

“On the margin front, we had specifically called out a one-off drop in margins on account of a couple of project cancellations in the last quarter. So of course, this quarter, that has not been there, and that itself has added to our margins. On top of it, there has been an operational efficiency-led increase in the margins by about 35 basis points,” the management said.

This also led to a sequential increase in net profit for the Mumbai-based company, with the bottomline rising to `1,133.8 crore in the June quarter, up from `1,099.9 crore in the previous quarter. However, it missed the analysts’ consensus estimate of `1,161 crore.

VERTICAL PLAY

India’s sixth-largest information technology company’s revenue from its largest vertical, the banking, financial services & insurance, saw a 2.9% sequential increase in the June quarter. Meanwhile, technology, media and communications and manufacturing and resources rose 7.9% and 1.8%, respectively, from the previous quarter.

“We are seeing early signs that they are beginning to deploy the savings and additional budget towards kicking off high-priority transformation programmes and making foundational investments for AI. We are seeing this play out more in BFSI and technology, media and communication, our largest verticals,” the company said.

Sales from technology, consumer Business and healthcare, life sciences, and public services decreased by 1.4% and 7.9%, respectively.

The company also said it was seeing strong traction in the generative artificial intelligence (GenAI) space and added that it would be difficult to give a revenue number as GenAI is now embedded in most projects.

“Majority of our focus 100 customers we are supporting in their AI journey, there are about 150 plus engagements that are currently going on in AI and GenAI space,” the management said.

Further, the company’s revenue contribution from North America improved 4.4% sequentially in the June quarter to 75.1%. The revenue from Europe rose 1%, while sales from the rest of the world saw a decline of 7.4%.

“The broader macro environment has remained unchanged, and businesses continue to adopt agile strategies to cope with the economic conditions. We expect the market to follow this path for FY25, where the focus will continue to be on cost takeout, but also on select high-priority transformations. As clients continue to build their AI momentum and graduate AI beyond the POC stages, we are well positioned to capitalize on these opportunities,” the management said.

EMPLOYEE METRICS

LTIMindtree’s total headcount rose by 284 in the June quarter to 81,934. The company’s attrition rate remained flat quarter-on-quarter at 14.4%, while the utilisation rose to 88.3% from 86.9% in the March quarter.

“As a result of a ramp-up in deals won, our utilization excluding trainees increased to 88.3% from 86.9% last quarter,” the management said. Additionally, the company said it added around 1,400 freshers in the quarter and plans to continue hiring in ongoing September quarter.

“We have had a significant intake of freshers in this quarter. And though we don’t want to call out a number, but we will continue to take freshers as per the plan that we have laid out (for FY25),” they said.