Antonio Jaramillo

Antonio Jaramillo asked about TaskUs's pricing strategy, specifically where the company finds opportunities to push through pricing versus encountering pushback, and how pricing is incorporated into the margin guidance. He also followed up on the expected 15% revenue growth from the top 20 clients (excluding the largest), inquiring which services these clients are leaning into across TaskUs's portfolio.

Answer

Bryce Maddock, Co-Founder and CEO, noted a dynamic and competitive pricing environment but affirmed TaskUs's premium position in AI services and premium customer support, allowing it to command premium prices due to strong operational execution. He attributed margin impacts to a geo-mix shift towards lower-margin onshore AI services work and increased AI transformation investments. For the top 20 clients (excluding the largest), Maddock explained that growth stems from vendor consolidation and exponential demand from emerging industries like foundational model developers and autonomous vehicle companies, with revenue from these two segments expected to more than double in 2026.

Antonio Jaramillo from Morgan Stanley asked about TaskUs's pricing strategy, specifically where the company finds opportunities to increase pricing versus encountering pushback, and how pricing is factored into the margin guidance. He also inquired about the services driving the projected 15% revenue growth for the top 20 clients (excluding the largest client).

Answer

Bryce Maddock, Co-founder and CEO of TaskUs, stated that the pricing environment is dynamic and competitive, but TaskUs maintains a premium position in AI services and premium customer support due to strong operational delivery. He noted that a geo-mix shift towards onshore AI services, which have lower margins, and increased AI transformation investments are weighing on overall margins. Maddock explained that the 15% growth in clients 2-20 is driven by vendor consolidation, strong operational execution, and exponential growth from foundational model developers and autonomous vehicle clients.

Antonio Jaramillo questioned the assumptions baked into Endava's top-line guidance, specifically how spend from top customers, pipeline, and booking assumptions contribute. He also asked about the broader pricing environment, including Gen AI engagement pricing versus core work, and the transition of Gen AI projects from proof-of-concept to production across industries.

Answer

CFO Mark Thurston indicated stability in the top 10 clients, with Q3 guidance being 95% contracted/committed and Q4 at 70-75%, reflecting typical historical levels and high confidence in pipeline conversion. CEO John Cotterell added that market uncertainty is reflected in the wide guidance range. Mr. Cotterell noted a strong shift in new business towards outcome-based solutions, supported by their AI approach and Dava.Flow model, which offers a wider range of margin outcomes with strong upside potential and protected downside.

Antonio Jaramillo from Morgan Stanley inquired about the top-line guidance assumptions, specifically how spend from top customers is factored in, and asked for pipeline and booking assumptions. Antonio Jaramillo also asked about the broader pricing environment, Gen AI engagement pricing versus core work, and trends in the transition from proof of concept to production for Gen AI projects across industries.

Answer

CFO Mark Thurston noted stability in the top 10 clients, with a slight slowdown expected in a large healthcare client in Q3 before resuming in Q4. He stated pipeline conversion rates are around 95% for Q3 and 70-75% for Q4, consistent with recent history. CEO John Cotterell added that market uncertainty is reflected in the wide guidance range. CEO John Cotterell explained that new business is shifting strongly towards outcome-based solutions, with Dava Flow supporting value delivery and offering a wider range of margin outcomes, strong at the top end and reasonably protected at the bottom.

Antonio Jaramillo asked for confidence in the strong acceleration implied in the fiscal year 2026 guidance for the back half, particularly regarding the three large deals, and about Endava's capital allocation priorities between AI investments and share buybacks.

Answer

CEO John Cotterell confirmed the three large deals are signed and committed. CFO Mark Thurston added that these deals, along with pipeline conversion, underpin the H2 ramp, and the guidance range accounts for pipeline risk. John Cotterell stated the share buyback program continues, and AI investments are a strategic priority, impacting short-term margins for future profitability.

Antonio Jaramillo asked about the strong acceleration implied in Endava's fiscal year 2026 back-half guidance, seeking confidence in the three large deals contributing as expected. He also inquired about Endava's capital allocation priorities, specifically balancing AI investments with share buybacks.

Answer

CEO John Cotterell confirmed the three large deals are signed and committed, with revenue ramp-up in H2. CFO Mark Thurston added these deals are additive, layering onto the run rate, and underpin confidence, with the guidance range accommodating pipeline conversion risk. He stated the share buyback program continues, and AI investments are impacting near-term margins, sacrificing short-term profitability for future upswing.

Antonio Jaramillo asked for an update on the GalaxE acquisition integration progress and how it contributes to the expected increase in profitability. He also inquired about bench dynamics and utilization trends.

Answer

CEO John Cotterell reported that the GalaxE integration is well-progressed, with systems cutover planned for the end of the month. He stated that profitability improvements are initially coming from G&A cost optimization, with more opportunities expected as the organizations align. On utilization, Cotterell mentioned the bench is stable and historically low, with utilization expected to rise modestly due to efficiency gains from internal tools.

Antonio Jaramillo from Morgan Stanley asked for an update on the GalaxE acquisition, including the integration progress and its contribution to the expected increase in profitability in the second half of the year. He also inquired about the dynamics of the employee bench and utilization trends.

Answer

CEO John Cotterell reported that the GalaxE integration is well-progressed, with a systems cutover planned for the end of the month. He stated that profitability is improving through G&A optimization, with more opportunities expected as the organizations align further into fiscal 2026. Regarding the bench, he described it as stable and historically low at 6-7%, with utilization expected to increase modestly through efficiency gains.

Antonio Jaramillo asked about the pricing environment, specifically how pricing varies across DXC Technology's business segments and where the most significant changes are observed. He also followed up on capital allocation priorities, inquiring how the planned increase in share buybacks for H1 fiscal 2027 is balanced with investment for growth.

Answer

CFO Rob Del Bene explained that pricing dynamics differ by segment (GIS, CES, Insurance) based on engagement profiles, upfront investments, and service types (software, BPS, consulting), noting that pricing has been stable across all segments this year. Regarding capital allocation, he reiterated that investment for growth is the top priority, followed by maintaining a strong balance sheet and shareholder returns, with confidence in cash generation allowing for early H1 FY27 guidance. President and CEO Raul Fernandez added that AI enables faster, cheaper solution building, reducing investment needs and allowing for more disruptive, value-based pricing.

Antonio Jaramillo followed up on DXC Technology's capital allocation priorities, specifically how the planned ramp-up in share buybacks for the first half of fiscal year 2027 is balanced with investment in the business.

Answer

CFO Rob Del Bene reiterated that investing to grow the business is the number one priority, followed by maintaining the right debt profile and returning capital to shareholders. He explained that after setting investment levels, the remaining cash is balanced between debt and shareholder returns, emphasizing confidence in cash generation and projections, which led to early guidance for fiscal 2027 H1 capital allocation. President and CEO Raul Fernandez added that building AI products is capital-light and faster due to democratized compute, allowing continued investment without significant cost, and leveraging DXC's existing scale and shared services.

Antonio Jaramillo of Morgan Stanley inquired about the strategy for managing low-margin contracts and the investment approach for Generative AI, including how it is priced into new client engagements.

Answer

CFO Rob Del Bene explained that DXC aims to improve unfavorable contracts at renewal by working with customers on price and terms, rather than exiting them. President & CEO Raul Fernandez stated the company's AI strategy is focused on 'learning by doing' internally and with clients, with the current year focused on experimentation before scaling.

Antonio Jaramillo, on behalf of James Faucette at Morgan Stanley, asked about the company's Generative AI investment strategy, the specific types of investments being made, and any early signs of return on those investments.

Answer

Acting CEO Jason Macdonnell explained that the fast pace of Gen AI allows for quick ROI. He outlined three key investment areas: 1) platforms to manage the crowdsourced talent for LLM training, 2) tools to manage project execution and generate quality insights, and 3) developing top-tier talent and proprietary datasets to support client model development.