Bryan Bergin

Bryan Bergin inquired about the traction of UiPath's agentic solutions, specifically asking for clarification on the 950+ client figure compared to previous quarters and whether scaling past POCs is driven by client capabilities or specific use cases. He also asked about any impact of the federal shutdown on the business.

Answer

CEO Daniel Dines noted strong momentum for agentic offerings, leading to pull-through across the platform, with high ROI use cases being customer-specific. CFO Ashim Gupta confirmed no direct impact from the federal shutdown, as many projects are funded and considered critical operations.

Bryan Bergin asked about the quantitative traction of UiPath's agentic solutions, specifically the 950+ clients, and whether scaling past proof-of-concepts is driven by client capabilities or specific use cases. He also inquired about any impact from the federal government shutdown on UiPath's business.

Answer

Daniel Dines, Founder and Chief Executive Officer, noted good momentum and consistent buying patterns for agentic offerings, with high ROI use cases being customer-specific. Ashim Gupta, Chief Operating and Financial Officer, clarified there was no direct impact from the federal shutdown, as many projects are funded and considered critical operations.

Bryan Bergin inquired about the progression of client demand for UiPath's agentic solutions, specifically the pacing from proof-of-concepts (POCs) and pilots to production, the mix of clients developing agents, and how agentic solutions are increasing deal sizes faster than traditional RPA. He also asked about the expected stability of the dollar-based net retention rate (DBNR) in the second half of the fiscal year.

Answer

Daniel Dines, Founder and CEO, noted encouraging progress with 450 customers actively building agents, leading to meaningful impact and uncovering more automation opportunities by combining orchestration, RPA, API, and agentic capabilities. Ashim Gupta, Chief Operating and Financial Officer, added that the agentic platform, being a new monetized product, naturally increases deal sizes and reinforces the need for deterministic automation, impacting deal sizes in POCs and pilots. Regarding DBNR, Ashim Gupta stated that the company expects stabilization, maintaining a prudent outlook on the macroeconomic environment, but sees positive signs from the government returning to normal buying behavior.

Bryan Bergin requested clarification on the 'favorable timing and mix of deals' between Q2 and Q3 mentioned in the guidance. He also asked about the drivers of margin outperformance, particularly the leverage in Sales & Marketing, and the balance between cost discipline and investing for growth.

Answer

CFO & COO Ashim Gupta explained that the favorable shift in revenue linearity is due to a better-than-expected mix of deals moving into the second quarter, which impacts revenue recognition under ASC 606. Gupta stated the company continues to invest in key areas and can self-fund some growth. Founder & CEO Daniel Dines added that launching five new products recently shows their commitment to investing in growth and innovation.

Bryan Bergin requested clarification on the scale of the U.S. federal public sector business and its expected performance. He also asked about the anticipated stabilization point for net new ARR throughout fiscal 2026.

Answer

CEO Daniel Dines described the federal vertical as historically one of their best-performing but noted it's currently in a transition. COO & CFO Ashim Gupta added that it is UiPath's third-largest vertical and is facing short-term procurement moratoriums. Gupta projected that the first half of the fiscal year will be weaker, with more pronounced seasonality leading to a stronger second half.

Bryan Bergin from TD Cowen requested more specifics on the internal changes still planned to foster a more entrepreneurial culture. He also asked about the company's outlook on the U.S. government market opportunity.

Answer

CFO & COO Ashim Gupta explained that most streamlining changes are complete, with the current focus on prioritizing investments in customer-facing functions and enabling the sales team for the Agentic launch. Regarding the U.S. government, he noted that while an election cycle brings uncertainty, the government's focus on efficiency is a positive driver for automation.

Bryan Bergin questioned the demand environment, asking if the macro variability seen last quarter stabilized through Q2 and August, and how the recent restructuring impacts the company's long-term 20%+ adjusted operating margin target.

Answer

CFO & COO Ashim Gupta described the macroeconomic environment as stable compared to the previous quarter but still variable, particularly in the commercial segment. Regarding margins, he stated that the company will update long-term guidance at an appropriate time but feels there is more efficiency to be gained, reaffirming the target of 20% 'plus'.

Bryan Bergin inquired about the unexpected client credit impacting Q1 performance, seeking details on its nature, size, and potential for recurrence, as well as whether recent pipeline conversion issues stem from demand changes or commercial restructuring.

Answer

CFO Mark Thurston clarified the credit was an unexpected procedural matter, not related to remediation, significantly impacting Q1 revenue and EPS. He noted pipeline conversion was below anticipation, leading to a full-year guidance downgrade, partially offset by large strategic wins. CEO John Cotterell added context on demand trends.

Bryan Bergin inquired about the unexpected client credit, seeking details on its nature, financial impact, cause, and potential for recurrence. He also asked about demand and pipeline conversion, specifically if it's a demand issue or friction from commercial responsibility changes, and how client sentiment and demand trends progressed through Q1 into early Q2.

Answer

CFO Mark Thurston explained the client credit was unexpected, procedural, and not related to remediating work, impacting revenue to the bottom of the guide and EPS to the middle. He noted pipeline conversion for non-large strategic deals was 50-80% of anticipated, leading to a full-year guide downgrade, partially offset by new large deal wins. CEO John Cotterell did not directly address this question.

Bryan Bergin asked about the impact of internal changes, such as the GalaxE acquisition, on execution amid a challenging demand environment, and inquired about workforce optimization and forecasting adjustments given client volatility.

Answer

CEO John Cotterell stated that the primary challenge is the delayed signing of large deals due to external client factors, not internal changes, which he believes have strengthened client conversations. He described the current situation as an 'air pocket' during a shift to AI-driven deals. CFO Mark Thurston added that the Q4 forecast is conservative, stripping out large, unpredictable deals and accounting for significant FX headwinds and client caution in the U.S. automotive and logistics sectors.

Bryan Bergin asked if internal changes, such as the GalaxE acquisition, have compounded execution challenges and how Endava's situation compares to peers seeing more stability. He also inquired about potential workforce optimization and changes to forecasting methodology given client volatility.

Answer

CEO John Cotterell stated that internal changes have strengthened client conversations rather than compounding issues. He attributed the slowdown to an 'air pocket' as the company shifts to AI-driven deals, noting a growing but slow-to-convert pipeline of large deals. On the workforce, he described a skill shift towards AI, data, and cloud. CFO Mark Thurston added that the forecast is now more conservative, with large deals stripped out and significant FX headwinds (an 8% dollar-GBP shift) being a primary factor in the reduced Q4 guidance.

Bryan Bergin of TD Cowen sought clarification on the impact of AI-driven sales cycle elongation on the company's growth recovery timeline. He also inquired about the path to gross margin recovery in fiscal 2025 and current market pricing dynamics.

Answer

CEO John Cotterell confirmed that sales elongation is a factor, as higher CFO scrutiny on project business cases combines with the uncertainty of a new technology like AI, delaying decisions. He does not foresee a major jump in growth in FY25 due to this. CFO Mark Thurston addressed margins, stating that while restructuring created savings, reinvestments in Dava.X, tools, and the GalaxE integration will weigh on margins in the first half of FY25, with improvement expected in Q3 and Q4. He noted that the guidance assumes flat pricing.

Bryan Bergin asked about U.S. payment volume growth, seeking evidence of consumer trade-down or differing cohort behavior, and early views on potential holiday spending trends.

Answer

CFO Sachin Mehra noted continued steady growth across affluent and mass market segments in the U.S. and globally, with overall consumer spending remaining healthy. CEO Michael Miebach added that while spending decisions vary by income level, carded transactions contribute to resilient trends.

Bryan Bergin asked about the U.S. payment volume growth, seeking evidence of consumer trade-down or differing behavior across cohorts, and early views on potential holiday spending trends.

Answer

CFO Sachin Mehra stated that drivers remain strong across affluent and mass markets, with consumers continuing to spend. CEO Michael Miebach added that while consumers at different income levels make varied spending decisions, the focus for Mastercard is on carded transactions, contributing to resilient trends.

Bryan Bergin inquired about the expected level of renewal activity in 2025 and the anticipated growth trajectory for rebates and incentives compared to 2024.

Answer

CFO Sachin Mehra characterized 2025 renewal activity as 'business as usual' with no unusual lumpiness. He guided for Q1 rebates and incentives as a percentage of payment network assessments to be similar to Q4. CEO Michael Miebach reiterated the strategic focus on winning the right portfolios and leveraging services to drive an attractive net revenue yield.

Bryan Bergin inquired about the expectations for EXL's digital operations segment in Q4 and fiscal 2026, and the long-term growth comfort level for this segment, considering the demand shift. He also asked about the drivers and sustainability of top client strength.

Answer

Vikas Bhalla, Chief Operating Officer, clarified that digital operations revenue (which includes domain, finance & accounting, and platform services) is impacted by the reclassification of AI-embedded services to the data and AI-led category. Despite this, the underlying business is growing, with a 6% net growth for digital operations in Q3. He expressed confidence in the pathway from digital operations to AI-led operations for new clients. For top clients, Mr. Bhalla highlighted strong growth, very low penetration rates, and significant opportunities for expansion across multiple service lines, indicating substantial potential for continued growth.

Bryan Bergin inquired about the expectations for digital operations revenue in Q4 and fiscal 2026, the long-term growth outlook for this segment, and the drivers behind the strength and sustainability of EXL's top client relationships.

Answer

Vikas Bhalla (COO) clarified that digital operations include domain, finance & accounting, and platform services, noting that revenue shifts from this category to data and AI-led as AI is embedded. He expressed satisfaction with client engagement and the pathway from digital operations to AI-led services. Regarding the top client, he highlighted strong year-over-year growth, extremely low penetration, and significant opportunity for future expansion, indicating potential for multiples of current business.

Bryan Bergin asked about the growth drivers in the Insurance and Healthcare sectors, and for quantitative details on how GenAI and Agentic AI are impacting revenue and margin profiles.

Answer

Chairman & CEO Rohit Kapoor explained that the Insurance vertical has a healthy growth rate and strong pipeline, while Healthcare's exceptional growth is driven by demand for data and AI solutions. He noted that the commercial model for AI is shifting to usage-based metrics, creating a long-term opportunity to expand margins and grow EPS faster than revenue, supported by EXL's high 94% success rate in AI deployments.

Bryan Bergin asked about EXL's 2025 growth guidance, inquiring about the proportion of annuitized revenue versus revenue that still needs to be converted. He also questioned how labor is allocated in AI-driven processes and whether increased AI adoption could cannibalize revenue from other service areas.

Answer

Maurizio Nicolelli, Chief Financial Officer, responded that for the midpoint of 2025 guidance, approximately 87% of revenue is already committed, with 95% overall visibility. Rohit Kapoor, Chairman and Chief Executive Officer, explained that AI will be adopted with a 'human in the loop,' which is expected to increase revenue per headcount and lead to a gradual, long-term evolution of the labor model rather than immediate cannibalization.

Bryan Bergin inquired about EXL's 2025 growth outlook, asking for commentary on client spending sentiment in Q4 and year-to-date, and how the new operating model will be implemented without causing friction. He also sought to understand the expected 2025 growth contribution from the data and AI portion of the business versus the remaining operations.

Answer

Rohit Kapoor, Chairman and CEO, stated that the demand environment remains strong, driven by clients shifting IT spending towards data and AI embedded in workflows. He explained the new operating model aims to bring EXL closer to its clients and accelerate capability deployment with minimal leadership disruption. Kapoor noted that a detailed breakdown of the new reporting segments and growth drivers would be provided at the company's Investor Day on May 6.

Bryan Bergin inquired about the sustainability of the elevated growth in the Digital Operations segment and asked for a forecast on the fourth-quarter growth trajectory for the Analytics business.

Answer

CEO Rohit Kapoor expressed confidence in the Digital Operations business, citing a strong demand environment and a growing pipeline of large deals, while noting the segment's target remains sustainable low-double-digit growth. For Analytics, both Rohit Kapoor and CFO Maurizio Nicolelli indicated that the growth momentum from Q3 is expected to continue into Q4, aligning with the full-year guidance where both business lines are trending towards low-double-digit growth rates.

Bryan Bergin asked about the PEO Worksite Employee (WSE) growth in Q1 relative to expectations and the confidence in accelerating this growth to reach the midpoint of the full-year guidance. He also inquired about the performance during the PEO July 1 enrollment period, specifically regarding participation rates, enrollment rates, or any buy-down behavior.

Answer

Peter Hadley (CFO) stated that PEO WSE growth in Q1 was "broadly in line" with expectations, slightly exceeding them by about 10 basis points. He attributed confidence in acceleration to bookings-driven assumptions and team investments, aiming for the 2-3% range. Maria Black (President and CEO) reported strong execution during the July 1 enrollment period, noting that health benefits remain a key focus for employers. She highlighted that participation rates are at their "highest levels... for the last four years or so," indicating an uptick that validates targeting industries valuing benefits.

Bryan Bergin asked for details on the underperformance in Employer Services (ES) new business bookings, specifically questioning the softness in HRO and international markets and whether it was concentrated in the mid-market.

Answer

President & CEO Maria Black confirmed the softness was in HRO and international. She clarified that for HRO, it involved delayed, not lost, decisions on large, complex deals in the upper mid-market and enterprise space. Ms. Black expressed confidence in reaccelerating growth in fiscal 2026, citing product maturity, investments in the salesforce, and healthy deal pipelines.

Bryan Bergin requested early thoughts on fiscal 2026, the resilience of the business model in a slowdown, and details on client hiring trends through Q3 and April.

Answer

CFO Don McGuire noted that while he wouldn't preempt the upcoming Investor Day, ADP's business is well-insulated and resilient, with many levers to pull in a slowdown. He confirmed that pays per control growth is still 'rounding down to 1%,' which is at the lower end of the normal range but remains positive, with no specific industry variations jumping out.

Bryan Bergin inquired about demand trends across client segments, any noticeable changes following the U.S. election, and differences in U.S. versus international bookings. He also asked about the confidence level in the FY25 EPS growth outlook, weighing potential upside from interest rates against FX headwinds.

Answer

CEO Maria Black described demand as strong and broad-based, highlighting strength in mid-market HR outsourcing and a healthy pipeline. She noted it was too early to see any impact from the new administration. CFO Don McGuire addressed the EPS outlook, explaining that FX headwinds and the impact of lower short-term interest rates in Q3 are significant pressures, leading them to maintain the full-year guidance despite strong client funds performance.

Bryan Bergin from TD Cowen asked about trends in smaller deal activity, average deal sizes, and the current ACV levels for new bookings. He also questioned the future delivery and operating model changes beyond FY26, particularly concerning visa changes, subcontractor mix, offshore mix, and their potential ceilings.

Answer

CEO Salil Parekh noted no significant changes in smaller deal activity or ACV structures, with large deals primarily focused on cost reduction, vendor consolidation, and AI-driven productivity. Regarding delivery models, Mr. Parekh explained that subcontractor usage is not a long-term lever, and Infosys will continue to leverage localization, nearshore, and offshore capabilities, anticipating an increase in client willingness for offshore work over time.

Bryan Bergin of TD Cowen inquired about the growth visibility for the North America geography and asked for an update on the trends in smaller deal activity.

Answer

CFO Jayesh Sanghrajka noted that while North America remains the largest geography with opportunities in financial services, areas like retail are challenging. He highlighted that 20 of the 28 large deals signed in the quarter were from North America. He declined to comment on small deal activity, stating the overall pipeline remains strong.

Bryan Bergin asked about the assumptions for discretionary spending in the forward forecast beyond the cited improvements in U.S. Financial Services, and how the company is modeling furlough activity compared to historical levels.

Answer

CFO Jayesh Sanghrajka stated that the revised guidance incorporates multiple factors, including Q2 performance, volume growth, and a strong pipeline for both large and small deals. He confirmed that typical H2 seasonality, including furloughs and fewer working days, has been baked into the forecast. He added that the furlough assumptions are in line with what the company has seen in recent years.

Bryan Bergin (TD Cowen) inquired about client behavior regarding Gen AI and agentic solutions, specifically if clients are increasingly attempting to implement these solutions themselves versus using third parties, and if Accenture has observed clients returning for help after initial self-implementation efforts. He also asked about the expected savings from the business optimization program and its potential impact on operations, including sustainably higher utilization combined with internal Gen AI adoption.

Answer

Chair & CEO Julie Sweet confirmed that many clients initially tried self-implementation of Gen AI but often returned to Accenture when facing challenges in scaling beyond proofs of concept, citing the complexity of organizational change management and process reinvention. Chief Financial Officer Angie Park stated that the business optimization program is expected to generate over $1 billion in savings, which will be reinvested in the business and people, while still delivering modest margin expansion. Chair & CEO Julie Sweet clarified that the optimization is primarily for talent strategy and non-strategic acquisitions, not directly linked to a structural change in utilization, which is expected to remain in the low 90s. She added that internal AI adoption will continue to drive efficiencies reflected in bookings and guidance.

Bryan Bergin from TD Cowen asked about client behavior regarding Gen AI and agentic solutions, specifically if clients are increasingly seeking to implement these themselves versus using third parties, and if any clients who initially attempted self-implementation have returned to Accenture for assistance.

Answer

CEO Julie Sweet confirmed that many clients initially attempted self-implementation of Gen AI due to its perceived simplicity but later returned to Accenture when facing challenges in scaling proofs of concept or managing the required organizational and process reinvention. She noted that Accenture's expertise in end-to-end process reinvention and change management is crucial for clients struggling with siloed organizations and data management.

Bryan Bergin inquired about client behavior regarding Gen AI and agentic solutions, specifically if clients are increasingly attempting to implement these themselves versus using third parties, and if clients who initially tried self-implementation are now returning to Accenture for assistance. He also asked about the expected savings from the business optimization program and its potential impact on utilization.

Answer

CEO Julie Sweet confirmed that many clients initially attempt self-implementation but often return to Accenture for help with scaling due to challenges in change management and process reinvention. CFO Angie Park stated that the business optimization program is expected to yield over $1 billion in savings, which will be reinvested while maintaining modest margin expansion. Julie Sweet clarified that the program is primarily for talent strategy and divestitures, not directly impacting utilization, which reflects demand and is expected to remain in the low 90s.

Bryan Bergin of TD Cowen sought more clarity on the 2% headwind from the federal business expected in Q4, asking if this should be considered a run rate. He also inquired about the financial implications, specifically potential cost savings, of the new integrated growth model.

Answer

CEO Julie Sweet stated it was too early to comment on the federal business outlook for FY26 but confirmed the Q4 estimate is their best current data point. She stressed that the new growth model is driven by capturing market opportunities to fuel growth, not by cost-cutting, citing the success of previous reorganizations in 2013 and 2020.

Bryan Bergin asked for more clarity on the federal business headwind for Q4, its potential as a run rate, and whether the new growth model change would result in cost savings.

Answer

CEO Julie Sweet stated it was too early to comment on fiscal 2026 but confirmed the 2% headwind in Q4 is their best current estimate. She emphasized that the growth model change is driven by capturing market opportunity and fueling growth by integrating services, not by cost-cutting, referencing past successful model changes that drove significant growth.

Bryan Bergin asked how Q2 bookings performed relative to internal plans and inquired about the management of the workforce mix, particularly the use of subcontractors.

Answer

CFO Angie Park stated the company was 'pleased' with its $20.9 billion in Q2 bookings and the 1.3 book-to-bill ratio. Regarding the workforce, she explained that subcontractor use fluctuates based on client needs and that the company's focus is on managing overall supply and demand, noting that employee utilization remained stable at their target of 91%.

Bryan Bergin requested commentary on the performance across Accenture's different service lines, specifically strategic consulting, tech services, and operations. He also asked about wage inflation in India, given the significant hiring there, and what levers the company is using to protect gross margins in a competitive pricing environment.

Answer

CEO Julie T. Sweet and CFO Angie Park both stated that growth was broad-based and strong across service lines. Park specified that for the full year, they expect consulting to grow in the mid-single-digit range and managed services in the mid-to-high range. Regarding margins, Park said there's no real change in wage inflation dynamics and that Accenture manages this by paying market-relevant wages while focusing on differentiation, cost efficiency, and delivery excellence to offset competitive pricing pressure.

Bryan Bergin asked about the size of Accenture's largest GenAI programs, the earliest internal productivity impacts from GenAI, and the potential magnitude of leverage the company might take on.

Answer

CEO Julie T. Sweet noted that GenAI deal sizes are increasing, with some now exceeding $10 million, up from sub-$1 million previously. She said internal productivity gains are most evident in managed services but are paced by client priorities. Incoming CFO Angie Park stated that any debt raise would be modest, net leverage would remain low, and the company would maintain its strong credit ratings, with potential interest expense already factored into guidance.

Bryan Bergin asked about the progress of the business optimization plan, specifically if the 3% headcount reduction was complete, and inquired about the performance of the creative pillar (GUT) amid concerns about GenAI's impact on the creative industry.

Answer

CFO Juan Urthiague confirmed the workforce reduction plan is largely complete, with costs accounted for in Q2. CEO Martín Migoya and Urthiague stated that the creative pillar (GUT) is growing nicely and they view AI as an opportunity, not a threat, because their focus is on high-level strategic branding which is less susceptible to automation and is one of Globant's fastest-growing areas.

Bryan Bergin requested details on the performance and outlook for Globant's top 10 clients, including any notable trends with Disney or Middle Eastern accounts, and asked about plans for managing the employee base.

Answer

CFO Juan Urthiague noted that while most client groups saw similar performance in Q1, stabilization is occurring in Q2, with consumer-focused clients having suffered more. He expects New Markets to continue outperforming. On resourcing, he affirmed the strategy remains unchanged: maintaining a globalized delivery footprint to support a global revenue base, prioritizing hiring where demand is strongest.

Bryan Bergin questioned the growth potential of the Middle East region and how the scale of new projects there compares to Globant's historically large deals.

Answer

CFO Juan Urthiague stated that while the current revenue base is small, the region's projects are typically magnificent in scale, involving massive technology investments to build new experiences from scratch. COO Patricia Pomies added that Globant is actively investing by opening a new office in Riyadh and building out its local team and strategy to capture this opportunity.

Bryan Bergin of TD Cowen inquired about the pace of new bookings conversion, particularly regarding deals delayed from Q1, and the net revenue impact of GenAI on traditional contracts.

Answer

CEO Balkrishan Kalra confirmed the overall pipeline remains healthy. CFO Mike Weiner added that one of the previously delayed large deals closed in Q2, along with three other new large deals. Regarding GenAI, Weiner explained that while productivity gains are shared with clients, Genpact sees net revenue growth from expanded scope, increased volumes, and new logos, making AI accretive to both revenue and margins.

Bryan Bergin asked for details on the revised growth outlook, particularly the significant change in Digital Operations, and whether the new guidance relies on delayed large deals closing soon. He also questioned how the company would achieve its affirmed margin targets with lower revenue.

Answer

CFO Mike Weiner explained that the outlook reduction is almost entirely due to a few large deals (>$50M) in manufacturing and high-tech being pushed out. He clarified the new guidance does not assume these deals will close in time to materially impact 2025 revenue. CEO BK Kalra added the deals are sole-sourced and active, not at risk of cancellation. Regarding margins, Weiner stated that the delay of these large, initially lower-margin deals actually supports the gross margin forecast, along with Q1 outperformance and cost discipline.

Bryan Bergin of TD Cowen asked CEO BK Kalra to reflect on his first year, asking about the most significant progress and key focus areas for 2025. He also requested clarification on the recent change to the bookings definition and any trends in Annual Contract Value (ACV).

Answer

CEO BK Kalra cited improved execution agility as the biggest achievement and named innovation as the primary focus for 2025. CFO Mike Weiner added that speed is a key priority. Regarding bookings, Weiner explained the definition was changed from a 5-year cap to uncapped to align with industry standards as contract durations expand. Kalra noted that ACV trends are influenced by the changing mix of deal sizes and tenures, making direct year-over-year comparisons difficult.

Bryan Bergin from TD Cowen inquired about the balance between new talent acquisition and bench optimization, given the slowdown in net headcount additions despite accelerating organic growth. He also asked what factors would be necessary for clients to increase discretionary spending more significantly.

Answer

Jason Peterson, CFO, explained that EPAM is actively managing its bench to improve utilization, which accounts for the slower headcount growth, but expects additions to increase in H2 to prepare for 2026. Balazs Fejes, President of Global Business & CRO, added that clients are compelled to resume discretionary spending for regulatory needs and platform shifts, particularly foundational work like data modernization required for AI adoption, which plays to EPAM's strengths.

Bryan Bergin asked about the confidence behind the raised 2025 organic growth guidance, particularly regarding second-half visibility, and requested details on bookings and AI-related work.

Answer

CEO Arkadiy Dobkin explained that while the first half was stronger than expected, the second-half outlook remains cautiously aligned with previous forecasts. CFO Jason Peterson added that demand improved through May and the guide reflects potential Q4 softness, though no change in client behavior is currently seen. Peterson also highlighted strong double-digit quarter-over-quarter growth in AI-related revenues from Q1 to Q2.

Bryan Bergin requested more detail on the progression of client spending behavior through Q4, particularly the dynamic between new and existing clients, and asked about the long-term margin outlook and whether EPAM expects to return to prior profitability levels.

Answer

CEO Arkadiy Dobkin noted that new clients are being added, some scaling quickly from GenAI proofs-of-concept, and that some former clients are returning for quality engineering. CFO Jason Peterson added that the Q4 revenue beat was driven by the core business, with strength in Europe and financial services. Regarding margins, Peterson stated that while H1 2025 will be pressured, they expect improvement in H2 and aim to return to their typical 16-17% non-GAAP operating margin range in the future.

Bryan Bergin of TD Cowen inquired about the specific client segments leading the demand recovery and sought early insights into 2025 budget discussions. He also asked for clarification on the forward-looking impact of the Poland R&D incentive on gross margin and the effective tax rate.

Answer

CFO Jason Peterson identified Financial Services and Hi-Tech as showing clear improvement, with continued strength in Life Sciences & Healthcare. He noted it was too early for definitive 2025 budget commentary but that conversations feel more constructive. Peterson explained the Poland R&D benefit impacts gross margin but cautioned that the disconnect between wage inflation and pricing will still pressure 2025 profitability, even with the incentive.

Bryan Bergin from TD Cowen asked about the visibility into the second-half acceleration for the Capital Markets segment and the potential tax implications of recent legislation.

Answer

CEO Stephanie Ferris expressed high confidence in a second-half rebound for Capital Markets, citing a strong recovery in loan syndication activity in July. CFO James Kehoe clarified that the tax bill has no impact on the effective tax rate, only on the timing of cash payments, and reaffirmed the full-year tax rate guidance.

Bryan Bergin asked about progress on working capital initiatives, potential CapEx synergies from the Issuer Solutions deal, and sales progress in Capital Markets.

Answer

CFO James Kehoe reported strong progress on working capital, which drove the significant Q1 free cash flow improvement. Regarding CapEx, CEO Stephanie Ferris noted that while scale offers synergy potential, continued investment in TSYS's platform modernization will likely keep CapEx around 8% of revenue. Ferris also confirmed that Capital Markets continues to see strong sales momentum and pipeline growth in both traditional and non-traditional verticals like private credit.

Bryan Bergin of TD Cowen inquired about the drivers and confidence in the fiscal 2026 free cash flow guidance, as well as the outlook for Q2 bookings and the overall health of the sales pipeline.

Answer

CFO Rob Del Bene expressed confidence in the free cash flow guidance, citing levers like working capital improvements and potential benefits from new tax legislation. He noted the Q2 pipeline is strong, particularly for non-mega deals, and that the company has an opportunity to further expand its trailing twelve-month book-to-bill ratio.

Bryan Bergin inquired about demand trends observed through the quarter and into April/May, asking for color by industry and the potential impact of tariffs. He also requested a bridge for the fiscal 2026 free cash flow guidance and clarification on the impact of finance lease originations.

Answer

CEO Raul Fernandez noted strong bookings in mega-deals but softness in smaller, discretionary projects since early April. CFO Rob Del Bene specified pipeline weakness in consumer, retail, and media industries, while banking, manufacturing, and public sector remain robust. For free cash flow, Rob Del Bene explained the FY26 guide of $600M is based on FY25 results adjusted for EBIT guidance and a ~$30M increase in restructuring, noting that underlying FCF is improving due to a strategic shift away from new lease financing.

Bryan Bergin sought to clarify the sustainable versus transitory factors affecting free cash flow, asking about the 'clean' Q3 operating margin and how the current performance relates to the prior view of a foundational $700 million FCF level.

Answer

CFO Rob Del Bene confirmed the clean Q3 operating margin was about 8.5%. He explained that after adjusting for lower restructuring cash outlays and the shift from leases to CapEx, the underlying free cash flow is stable year-over-year at around $750 million. He positioned the updated FY25 guidance of $625 million as a solid foundation for FY26.

Bryan Bergin of TD Cowen inquired about the early client reception to the new AI-powered GAIN engagement model, its expected adoption rate, and its potential impact on the company's growth and gross margin. He also asked how the company is balancing near-term investments in R&D and bench strength against cost optimization.

Answer

SVP & Head of Americas Vasily Sizov stated that client demand for AI-powered engagements is increasing and that aspects of the GAIN model are already being used in fixed-price projects, with pilots for the full model underway with two top-15 customers. CEO Leonard Livschitz emphasized that the key financial impact will be a substantial increase in revenue per person. Regarding investments, CFO Anil Doradla described a balancing act, while Leonard Livschitz bluntly stated a determined strategy to invest heavily in AI leadership, prioritizing it over short-term cost optimization to capture future growth.

Bryan Bergin asked about client behavior and decision-making pace through the quarter and into April, the contractual commitment level of the full-year guidance, and the company's hiring intentions for the remainder of the year.

Answer

CEO Leonard Livschitz stated that strategic client projects continue uninterrupted despite macro caution, with the ramp-up from March extending into April. He affirmed confidence in the full-year guidance, noting it was set with a high degree of conservatism and is supported by long-term committed budgets rather than short-term projects. Livschitz also described the company's hiring as a consistent process, leveraging internal programs like Grid University to develop talent and maintain stability.

Bryan Bergin inquired about the client "sense of urgency" to complete projects, its implications for 2025, the outlook for profitability, and changes to contracting structures for scaling AI projects.

Answer

CEO Leonard Livschitz explained the urgency is tied to new AI-related initiatives moving from pilots to production, which is setting up longer-term application work. On profitability, he and CFO Anil Doradla noted that while underlying fundamentals are improving, the company is prioritizing strategic investments in AI, partnerships, and global expansion over maximizing short-term margins. For AI contracts, Livschitz stated that while performance-based models are offered, most scaled projects still use traditional T&M or fixed-bid structures within larger initiatives.

Bryan Bergin of TD Cowen inquired about the incremental impact of the U.S. budget bill on the Healthcare segment's growth and asked about potential offsets. He also questioned Cognizant's strategy regarding the convergence of IT services and BPM, specifically its approach to building domain expertise.

Answer

CEO Ravi Kumar S stated that Cognizant's exposure to Medicaid is not significant and sees the broader healthcare environment as a major productivity-led opportunity, citing a recent mega-deal win. Regarding IT/BPM convergence, he described it as a "headless transformation opportunity" where Cognizant's tech prowess can disrupt traditional operations, highlighting the company's 10,000-person AI data training service as a key organic capability.

Bryan Bergin inquired about the momentum in large deal bookings and whether Cognizant has achieved a consistent rhythm, asking for details on the go-to-market engine's evolution. He also asked for the 2025 organic growth outlook by industry segment.

Answer

CEO Ravi Kumar S confirmed strong momentum, citing 29 large deals in 2024 versus 17 in 2023, a 1.4x book-to-bill ratio, and the return of smaller deals. He stated the company is now in a rhythm with higher win rates across a broader spread of services and industries. For 2025, he anticipates broad-based organic growth, highlighting continued strength in Health Sciences, a recovery in Financial Services discretionary spend, and new capabilities in Products & Resources via the Belcan acquisition.

Bryan Bergin asked about the factors influencing near-term growth reacceleration into 2025, given the organic exit rate and flat bookings. He also inquired about the optimal employee utilization level and whether the current rate is an upper bound.

Answer

CEO Ravi Kumar S acknowledged the improved growth velocity exiting 2024 but stated it was too early to provide a 2025 outlook. Regarding utilization, he commented that while the company is approaching its target, there is still 'a little more flex left' for improvement, but 'not a lot more'.

Bryan Bergin asked for a bridge explaining the deceleration in organic Management Solutions growth from Q3 to Q4 and questioned the strategy for reaccelerating organic client growth versus the new cross-selling emphasis.

Answer

CFO Bob Schrader attributed the Q4 deceleration to softer checks per client, MPP enrollment headwinds, lower retirement asset growth, and a tougher pricing comparison. President & CEO John Gibson reaffirmed the company's disciplined growth formula, which includes 1-3% organic client growth, product penetration, and pricing, rather than pursuing unprofitable client additions.

Bryan Bergin of TD Cowen requested a bridge for the deceleration in organic Management Solutions growth from Q3 to Q4 and inquired about plans to reaccelerate organic net client growth.

Answer

CFO Bob Schrader attributed the Q4 slowdown to softer checks, MPP enrollment headwinds, lower retirement asset growth, and a tougher year-over-year pricing comparison. President & CEO John Gibson emphasized a continued focus on disciplined, profitable growth through their established formula of client growth, product penetration, and value-based pricing, rather than chasing client counts with promotions.

Bryan Bergin inquired if strength in the Management Solutions business could offset the moderated PEO outlook and asked for details on the ERTC reserve release.

Answer

CEO John Gibson clarified that there is no trade-off, as both Management Solutions and PEO businesses are performing strongly with upper single-digit worksite employee growth. He also confirmed the ERTC reserve was a small, immaterial amount that was factored into guidance and has now been released as planned.

Bryan Bergin asked for details on Q1 bookings and retention performance versus plan, and inquired about the drivers for PEO acceleration and the status of the October 1 health enrollment period.

Answer

Executive Robert Schrader stated that retention continues to be at or near record levels, with client retention improving year-over-year. CEO John Gibson added that PEO acceleration is driven by worksite employee growth and solid bookings, and that the current benefits enrollment period is meeting or slightly exceeding expectations for both client retention and participant penetration.

Bryan Bergin requested more detail on trends within the top 10 clients, asking for the constant currency growth rate for that group. He also asked if the push for Gen AI productivity is client-led or company-driven, and followed up with a question on gross margin expectations for the remainder of 2025.

Answer

Founder & CEO Cesar Gon confirmed strong growth across top clients, noting an approximate 11% growth rate for the top 2-10 clients, and stated that the push for AI-driven efficiency is '100% CI&T pushing for that,' leveraging its CI&T FLOW platform. CFO Stanley Rodrigues addressed margins, stating that investors should expect the typical seasonal pattern where margins improve throughout the year following Q1 salary increases.

Bryan Bergin inquired about the expected shape of growth throughout 2025, given the strong Q1 guidance. He also asked about the company's visibility into the full-year forecast, specifically the mix of contractually committed revenue versus pipeline. Lastly, he questioned how the use of GenAI is impacting commercial contracting terms in client engagements.

Answer

CEO Cesar Gon projected a solid Q1 followed by continued sequential expansion from Q2 onward. He described the full-year guidance as conservatively ranged, with the high end driven by a strong pipeline and the low end reflecting caution for macro volatility. Regarding GenAI, he explained that demand is split between using AI for efficiency (e.g., legacy modernization) and for enhancing customer experiences (e.g., hyper-personalization), with AI becoming progressively embedded in all digital projects.

Bryan Bergin from TD Cowen focused on the strong performance of CI&T's top 10 clients, asking about the sustainability of that growth into Q4 and early 2025. He also questioned if there is a difference in the profitability profile of client engagements that heavily leverage the CI&T/FLOW platform.

Answer

Founder and CEO Cesar Gon expressed confidence in continued growth by replacing underperforming vendors and expanding within large clients, supplemented by new logos in automotive and retail. Regarding CI&T/FLOW's profitability, Cesar noted it's early but sees potential for margin gains. Founder and President Bruno Guicardi added that for 2024, the strategy was to pass productivity gains to clients to accelerate growth, with plans to capture more value in 2025.

Bryan Bergin from TD Cowen inquired about any important considerations for segment-level forecasts for the remainder of 2025 and asked for a breakdown of the impact from residual attrition versus risk pairing within the SMB segment.

Answer

CFO Tim O’Leary identified potential shifts in interest rate curves as the most significant factor for segment forecasts, noting the current guidance assumes three rate cuts. He also stated that risk pairing had a larger impact on SMB results than residual runoff, at roughly a 2:1 ratio, and that these actions are largely complete. CEO Thomas Priore added that the risk pairing was a proactive move to position the company for long-term benefits from upcoming changes in network rules for specialized e-commerce.

Bryan Bergin from TD Cowen asked for an update on the Enterprise segment's CFTPay product, specifically regarding the projected pace of client additions in 2025 and any impact from consumer credit trends. He also requested the financial magnitude of the CapEx to OpEx shift and its implications for 2025 free cash flow.

Answer

CEO Thomas Priore stated that client boarding trends for CFTPay remain at historically high levels and that guidance is conservative on this front, suggesting potential upside. CFO Tim O’Leary quantified the 2025 OpEx impact from the cloud migration at approximately $4 million. He also noted that free cash flow is somewhat neutral to interest rate changes due to the natural hedge between floating-rate debt and floating-rate income on deposits.

Bryan Bergin inquired about the current client demand environment, particularly regarding signing pace and spending behavior since March, following the two large deal wins. He also asked for a breakdown of the fiscal 2026 growth outlook, seeking clarity on the puts and takes such as productivity commitments and client ramp-downs.

Answer

CEO Keshav Murugesh noted that despite macro uncertainty, clients are consistently moving forward with digital transformation and cost reduction initiatives, even accelerating some deal closures. Executive David Mackey added that 90% of WNS's business has low macro correlation, though the 10% project-based portion requires monitoring. Regarding the outlook, Mackey explained that the 9% growth midpoint includes a roughly 13% total headwind, comprising a normalized 10-11% from productivity and project roll-offs, plus an additional 2% annualized impact from prior-year ramp-downs in healthcare and travel.

Bryan Bergin inquired about the progress of the large deal pipeline, including visibility on near-term closures, and asked for commentary on vertical performance, particularly in travel and the drivers of the acceleration in insurance.

Answer

CEO Keshav Murugesh expressed high confidence in the large deal pipeline, which contains over 20 qualified deals, and anticipates a potential closing in the next 1-2 quarters, while noting timing remains uncertain. Executive David Mackey clarified that travel volumes are stabilizing, now representing only 3% of revenue. The insurance vertical's growth was driven by new Gen AI-led work with a U.S. client, not the previously discussed large captive deal.

Bryan Bergin inquired about the extent to which pressure from the Online Travel Agency (OTA) vertical contributed to the guidance reduction and asked for the rationale behind the sequential increase in headcount despite revenue headwinds.

Answer

Executive David Mackey quantified the OTA impact as a 1-2% reduction to the full-year guidance, noting that OTA revenue is now below 4% of the company's total. CFO Arijit Sengupta explained that the headcount increase is proactive hiring to support the expected sequential revenue growth in Q3 and Q4. Mackey added that replacing the revenue from the lost, low-headcount healthcare client with more traditional services requires more personnel.

Bryan Bergin of TD Cowen asked whether the fiscal 2025 growth outlook relies on winning new large deals and if the growing large-deal pipeline reflects market expansion or company-specific sales investments. He also sought details on the volume pressures within the travel vertical.

Answer

CEO Keshav Murugesh attributed the large deal pipeline growth to strategic investments in senior sales talent and a focus on creating new opportunities directly with C-level executives. Executive David Mackey confirmed that winning a couple of these deals is necessary to meet guidance but expressed confidence given the pipeline size of over 20 deals. On the travel vertical, Mackey clarified that pressure is concentrated in the Online Travel Agency (OTA) segment due to macro factors, client strategy changes, and a push toward automation, noting that OTA revenue is now less than 5% of the total. Executive Arijit Sen added that new large deals are shifting the mix away from OTAs to more stable areas of travel.

Bryan Bergin inquired about the current demand environment on 'Main Street' amid economic volatility, client hiring trends, and the expected revenue contribution mix between the payroll tax management business and the traditional SMB segment for 2025.

Answer

CEO Pat Goepel responded that despite media narratives, 'Main Street' businesses are still hiring, and Asure has conservatively modeled a flat employment plan for the year. He noted that while the tax filing business will continue to grow, the key focus for 2025 is driving revenue through cross-selling the expanded product portfolio to increase attach rates and overall account value.

Bryan Bergin asked for more detail on the trends in commercial spending during the first quarter and whether the observed improvement is considered sustainable within the fiscal 2025 outlook.

Answer

Chris Suh, Chief Financial Officer, confirmed that the 6% growth in commercial volumes was an improvement from Q4. He attributed this to favorable days mix, strong commercial cross-border volumes, and a reduced drag from ATS. He stated that these trends are embedded in the Q2 guidance and are expected to remain 'steady, stable and strong' for the rest of the year.

Bryan Bergin inquired about the early feedback and execution of the sales realignment and point-of-sale (POS) brand consolidation, asking if it created any friction or churn in Q3. He also asked for an update on the underlying performance drivers for the Issuer segment.

Answer

CEO Cameron Bready reported positive receptivity to the new 'Genius' POS brand and stated there was no material friction from the consolidation in Q3, as the main efforts are planned for 2025. For the Issuer segment, Bready acknowledged macro headwinds but highlighted a strong conversion pipeline of over 65 million accounts and recent renewals with top-20 clients as key drivers providing visibility.