Vincent Colicchio

Vincent Colicchio inquired about the adequacy of labor resources within the GS&BT segment to meet current AI demand and any associated concerns.

Answer

Chairman and CEO Ted Fernandez stated there are no concerns regarding labor resources, emphasizing that growth will be increasingly driven by sophisticated platforms like Accelerator and Transformation Explorer, which enhance productivity. He highlighted that these platforms allow for more value delivery in reduced timeframes, making headcount growth less critical. Mr. Fernandez also elaborated on AI Explorer version 4's 'game-changing' capabilities, including its ability to simulate thousands of AI solutions, inform client-specific automation footprints at a detailed process level, and dramatically accelerate solution detailing from weeks to less than an hour, significantly improving ROI estimations.

Vincent Colicchio questioned the adequacy of current labor resources in GS&BT to meet AI demand and asked for clarification on what makes AI Explorer version 4 'game-changing' compared to market alternatives.

Answer

Chairman and CEO Ted Fernandez assured that there are no concerns about labor resources in GS&BT, citing productivity improvements from Accelerator and Transformation Explorer, and emphasizing that growth will be driven by sophisticated platforms combined with talented professionals, not solely headcount. He explained that AI Explorer version 4 is game-changing due to its enhanced ability to inform client-specific automation footprints down to the sub-process level, improved data source integration, and the Hackett solution language model's capability to generate an 80% solution for complex agentic workflows in less than an hour, dramatically improving the accuracy and detail of recommendations.

Vincent Colicchio of Barrington Research Associates questioned if Hackett has the necessary labor resources to meet current AI demand and whether extensive employee training was impacting utilization rates. He also asked for an update on how the AI Explorer product competitively stacks up, especially with the upcoming version four.

Answer

Ted Fernandez, Chairman and CEO, confirmed that the company has the necessary resources for AI demand, aided by productivity gains from its own platforms, though hiring continues. He clarified that utilization weakness was concentrated in the non-AI technology groups being restructured, not due to training. Regarding AI Explorer, Fernandez shared highly positive feedback from a recent demonstration to a leading AI enterprise software company, which called the platform 'excellent' and the most 'complete and thoughtful' they had seen, even before the full version four release.

Vincent Colicchio of Barrington Research Associates inquired if Hackett has adequate labor resources for AI demand, asked about the impact of training on utilization rates, and sought details on the competitive differentiation of the AI Explorer product, particularly the upcoming version 4.

Answer

Chairman and CEO Ted Fernandez affirmed they have the necessary resources, noting that platform capabilities are also driving operating improvements and accelerating solution design. He stated that utilization weakness was concentrated in the technology groups, which is being addressed by the restructuring. Regarding AI Explorer, Fernandez shared recent, highly positive feedback from a leading AI enterprise software company, which called the platform 'excellent' and more 'complete and thoughtful' than anything they had seen.

Vincent Colicchio of Barrington Research questioned the proportion of AI revenue from implementation versus consulting, the extent of cross-selling from GenAI engagements to other services, and the pipeline outlook for the Oracle Solutions segment.

Answer

Ted Fernandez, Chairman and CEO, estimated a 50-50 split between GenAI consulting and implementation revenue for the quarter, expecting implementation to become a much larger multiple over time. He confirmed that cross-selling is occurring, with a common path being the enhancement of traditional digital transformation projects with a GenAI scan. For the Oracle segment, he noted that while overall activity is solid, the segment is expected to be down as it works to replace a large engagement that recently concluded.

Vincent Colicchio asked for the outlook on the Oracle business beyond Q1, questioned if the company needed to increase its Gen AI talent to meet demand, and requested an update on the ZBrain joint venture.

Answer

Chairman and CEO Ted Fernandez stated that Oracle activity remains strong, especially in EPM. He confirmed that the company has been actively increasing headcount in its Gen AI groups to meet demand, as noted by the CFO. Regarding the joint venture, Fernandez reported that it is beginning to sign licenses, the final agreements are being formalized, and it will offer clients flexible licensing or consulting engagement options, with licensing activity expected to grow.

Vincent Colicchio from Barrington Research asked about the outlook for the eProcurement business, questioning if its recent weakness was expected to continue. He also inquired whether the strong growth momentum in the Oracle and SAP segments would persist on a seasonally adjusted basis.

Answer

Ted Fernandez, Chairman and CEO, responded that the negative year-over-year impact from eProcurement weakness will annualize after Q1 2025, noting the GSBT segment would have grown nearly 5% without it. For Oracle and SAP, he directed attention to CFO Robert Ramirez's guidance, which projects year-over-year growth for all three segments in Q4, with total company revenue expected to be up 3% to 5%.

Vincent Colicchio asked about the competitive landscape for EXLdata.ai, specifically if similar products exist in the market.

Answer

Rohit Kapoor (CEO) explained that while many companies are building data solutions, EXLdata.ai differentiates itself by using AI to make data AI-ready, rather than relying on manual processes. He described it as a comprehensive, end-to-end solution covering data lineage, accessibility, governance, master data management, and unstructured data across various platforms, positioning it as a first-of-its-kind offering that resonates strongly with partners and clients.

Vincent Colicchio asked about the competitive landscape for EXLdata.ai, inquiring if similar products exist and how EXL's offering differentiates itself. He also questioned the strategies EXL is employing to accelerate growth in the international segment, given its large opportunity.

Answer

Rohit Kapoor, Chairman and Chief Executive Officer, explained that while other companies are building data solutions, EXLdata.ai differentiates by using AI itself to make data AI-ready, rather than relying on manual processes. He emphasized its comprehensive, end-to-end capabilities for data lineage, accessibility, governance, master data management, and tackling unstructured data. Mr. Kapoor confirmed that EXL is consciously investing in the international segment to accelerate growth, including adding senior executive talent, applying successful US-based solutions, building local partnerships, and maturing the business, recognizing its strong potential.

Vincent Colicchio asked for an update on the AI competitive landscape and whether any new competitors are entering in a meaningful way. He also inquired about current pricing trends and if they are being impacted by the macroeconomic environment.

Answer

Rohit Kapoor, Chairman and Chief Executive Officer, described the AI competitive landscape as diverse, including start-ups, hyperscalers, and large technology firms. He asserted that EXL's key advantage is its deep understanding of client operations, workflows, and data. On pricing, he acknowledged that the macro environment makes it competitive, but EXL's focus on delivering value and business outcomes, backed by long-term relationships, helps manage pricing pressures.

Vincent Colicchio asked for commentary on the new deals added during the quarter, including their size and nature, and inquired about the M&A pipeline, market valuations, and capital allocation priorities.

Answer

CEO Rohit Kapoor described the new deal wins as well-spread across business lines and similar in quality to past quarters, including some large Global 1000 logos expected to ramp up. CFO Maurizio Nicolelli stated that the M&A pipeline has opportunities but EXL remains selective. He reiterated a balanced capital allocation strategy between strategic M&A, like the recent ITI acquisition, and share repurchases, noting the company has spent $185 million on buybacks this year at an attractive price.

Vincent Colicchio also inquired about the overall health of the sales pipeline, asking if it is broad-based or if strength is concentrated in specific segments that performed well this quarter.

Answer

Chris Caldwell, President, CEO & Director, expressed satisfaction with the pipeline, attributing it to deep domain expertise brought into strategic verticals, driving transformation and integrated offerings. He noted good momentum across major regions (EMEA, Americas, Asia-Pacific) and highlighted that new deals are characterized by desired margin profiles, longer contract lengths, stickiness, and complexity.

Vincent Colicchio asked if the industry consolidation trend remains robust and if it is still in its early stages. He also inquired about the overall health and breadth of the sales pipeline, specifically whether strength was concentrated in the three strong segments from the quarter or if it was broad-based.

Answer

President and CEO Chris Caldwell affirmed that industry consolidation is expected to continue for the next 24-36 months, driven by clients seeking fewer, deeper partnerships, and is still in early innings. He expressed satisfaction with the sales pipeline, noting that investments in deep domain expertise are driving strong momentum across strategic verticals and major regions (EMEA, Americas, Asia-Pacific). Caldwell and CFO Andre Valentine emphasized that new deals are characterized by desired margin profiles, longer contract lengths, increased stickiness, and higher complexity.

Vincent Colicchio inquired about the overall health of the sales pipeline, asking if it is broad-based or concentrated in the strong-performing segments from the current quarter.

Answer

President and CEO Chris Caldwell expressed satisfaction with the pipeline, attributing its strength to the recruitment of deep domain expertise in strategic verticals, driving transformation and integrated offerings. He noted good momentum across major regions (EMEA, Americas, Asia-Pacific). CFO Andre Valentine added that the pipeline reflects desired margin profiles, longer contract lengths, increased stickiness, and higher complexity in deals.

Vincent Colicchio of Barrington Research asked for more detail on the benefits Concentrix is seeing from vendor consolidation and for an update on the growth and scale of its managed services business.

Answer

President & CEO Chris Caldwell attributed the success in vendor consolidation to three factors: top-tier operational performance, advanced technology offerings, and the scale to provide a broad, integrated portfolio of services. He confirmed this trend has continued momentum. Regarding managed services, Caldwell noted that it is a smaller but fast-growing part of the Catalyst business, with demand being significantly boosted by the ongoing maintenance requirements of AI solutions.

Vincent Colicchio asked for an update on the new business pipeline from former Webhelp clients in Europe, the performance of the Catalyst business, and the current state of the vendor consolidation trend.

Answer

CEO Christopher Caldwell confirmed that the European pipeline is strong, alongside Asia Pac and the Americas, with a notable increase in transformational deals. He stated that the Catalyst services attach rate was up meaningfully in Q1. He also affirmed that Concentrix is benefiting from vendor consolidation more now than a year ago and believes the trend is still in its 'early innings.'

Vincent Colicchio asked about the outlook for the Technology & Consumer Electronics (TCE) vertical, the sustainability of winning client consolidation opportunities, and whether the company has a new annual target for portfolio automation.

Answer

CFO Andre Valentine stated that while the TCE vertical's growth is muted by low underlying volumes, Concentrix is gaining market share. CEO Christopher Caldwell affirmed that the client consolidation trend has legs, driven by clients' focus on cost and integrated solutions. He clarified that while there is no new specific automation percentage target, the pace of automation has significantly accelerated at clients' requests.

Vincent Colicchio of Barrington Research Associates inquired about the performance of the Engage segment's offshore business and asked which verticals are expected to be strongest in the second half of the year.

Answer

Founder, Chairman & CEO Kenneth Tuchman and CFO Kenneth Wagers confirmed a strong focus on expanding offshore operations, driven by client demand and the availability of high-quality talent in regions like South Africa, Egypt, and Latin America. Wagers noted the offshore mix is trending towards 37-39% for the year. For verticals, Tuchman highlighted financial services, healthcare, technology, travel, and streaming media as key growth areas for the Engage segment.

Vincent Colicchio of Barrington Research Associates inquired about the performance of the TTEC Engage offshore business during the quarter and asked which industry verticals appear most promising for the second half of the year.

Answer

CFO Kenneth Wagers stated that the majority of the sales pipeline and client demand is for offshoring, with strong expansion in South Africa, Egypt, Eastern Europe, and Latin America, keeping them on track for their 37-39% offshore mix target for the year. Kenneth Tuchman, Founder, Chairman & CEO, added that key verticals showing opportunity include financial services, healthcare, technology, travel, and streaming media, reflecting the company's successful diversification strategy.

Vincent Colicchio of Barrington Research Associates inquired about the performance of the TTEC Engage offshore business during the quarter and asked which verticals are showing the most promise for the second half of the year.

Answer

Kenneth Wagers, CFO, stated that the majority of the sales pipeline and client demand is for offshoring, with strong expansion in South Africa, Egypt, Eastern Europe, and Latin America. He confirmed the offshore mix improved and is trending towards 37-39% for the year. Kenneth Tuchman, Founder, Chairman & CEO, identified financial services, healthcare, technology, travel, and streaming media as key growth verticals, highlighting the company's successful diversification efforts.

Vincent Colicchio of Barrington Research Associates inquired about the performance of the TTEC Engage offshore business during the quarter, plans for future investments in this area, and which verticals within Engage appear most promising for the second half of the year.

Answer

CFO Kenneth Wagers stated that the offshore business performed well, with the majority of the sales pipeline focused on offshoring to meet client demand and access top talent. He highlighted expansion in South Africa, Egypt, Eastern Europe, and Latin America, with the offshore mix trending toward 37-39% for the year. Founder, Chairman & CEO Kenneth Tuchman and CFO Kenneth Wagers identified financial services, healthcare, technology, travel, and streaming media as key growth verticals, reflecting successful diversification.

Vincent Colicchio of Barrington Research Associates inquired about the performance of the Engage segment's offshore business and plans for future investment, as well as the most promising industry verticals for the second half of the year.

Answer

Kenneth Wagers, CFO, stated that the majority of the sales pipeline is focused on offshoring, with strong expansion in South Africa, Egypt, Eastern Europe, and Latin America, targeting an offshore mix of 37-39% for the year. Kenneth Tuchman, Founder, Chairman & CEO, added that key growth verticals include financial services, healthcare, technology, travel, and streaming media, reflecting the company's successful diversification strategy.

Vincent Colicchio of Barrington Research Associates questioned the performance of the Engage segment's offshore business and whether more investment is planned. He also asked which verticals within Engage appear most promising for the second half of the year.

Answer

Kenneth Tuchman, Founder, Chairman & CEO, and Kenneth Wagers, CFO, confirmed a strong focus on expanding the offshore business. Mr. Wagers elaborated that the sales pipeline is majority offshore, driven by client demand and talent availability in South Africa, Egypt, Eastern Europe, and Latin America, with the offshore mix trending toward 37-39% for the year. For verticals, Mr. Tuchman highlighted opportunities in financial services, healthcare, technology, travel, and streaming media, emphasizing the company's successful diversification strategy.

Vincent Colicchio questioned the maturity of enterprise data infrastructure for AI adoption, whether ISG faces labor shortages for AI talent, and the expected performance of geographic regions in the second half of the year.

Answer

Chairman & CEO Michael Connors described the AI market as being in the 'second inning,' with client adoption focused on securing funding via cost optimization and then scaling. He stated that ISG is not turning away business due to labor shortages, having trained over 1,100 employees and leveraging its own AI agents. For the geographic outlook, he expects the Americas to continue leading growth, with Europe poised to return to year-over-year growth in the second half.

Vincent Colicchio questioned how ISG is addressing talent needs for AI, including hiring and retention, and whether the strong second-half outlook for Europe and APAC implies a slowdown in the Americas.

Answer

CEO Michael P. Connors detailed ISG's AI talent strategy, which includes training 90% of its client-facing staff, making surgical hires for AI skills, and trimming less needed skills. He noted client AI adoption is growing, with ISG serving 200 clients in the space. Regarding regional performance, he clarified that while the percentage growth in the Americas may moderate from Q1's high level, he still expects strong double-digit growth to continue, independent of the expected second-half recovery in other regions.

Vincent Colicchio of Barrington Research Associates inquired about the strongest areas within the Americas sales pipeline, the consultant utilization rate, the company's comfort level for that metric, and the expected progress for the APAC region during the year.

Answer

Michael P. Connors, Chairman and CEO, identified two strong drivers in the Americas pipeline: a pickup in cost optimization and an increasing client focus on AI-driven digital transformation. He projected APAC would see improvement in the second half of the year. Michael Sherrick, EVP and CFO, reported the Q4 consultant utilization rate was 72% and confirmed the company remains comfortable in the low to mid-70s range.

Vincent Colicchio inquired about early signs of improving sales cycles in the Americas, whether the expected demand return will be a gradual flow or a sudden wave, and if concerns around AI have eased enough to drive significant revenue in 2025.

Answer

CEO Michael P. Connors stated that he expects sales cycles in the U.S. to improve starting in Q4, aided by post-election clarity. He anticipates that demand in the Americas could grow beyond the high single-digit target in 2025, with Europe lagging by a few quarters. Regarding AI, Connors confirmed revenue will accelerate in 2025 but will likely be more significant in 2026 as clients are still moving at a measured pace, though AI is now a component in nearly all sourcing deals.

Vincent Colicchio from Barrington Research Associates inquired about the strategies driving strong net new client growth, the current competitive landscape, the reasons for the slowdown in the Pacific Northwest, and requested clarification on recent wage inflation and average hours worked trends.

Answer

CEO Gary Kramer attributed client growth to a combination of strong personnel, expanded product offerings in health and IT, a larger addressable market, and a focused sales process, confirming most new clients are new to the PEO model. He explained the Pacific Northwest slowdown is concentrated in Portland due to local economic headwinds. CFO Anthony Harris clarified that consistent wage inflation was offset by a decrease in average hours worked, resulting in a net 1.7% increase in average billing per WSE.

Vincent Colicchio asked for more detail on the drivers behind the impressive net new client adds, the specific tariff exposure for the staffing business, and current pricing trends in the market.

Answer

Executive Gary Kramer humorously declined to reveal the company's 'playbook' for client acquisition. Regarding the staffing business, he clarified that its agricultural clients are largely domestic-focused and not heavily impacted by China tariffs, while logistics has seen some pull-forward activity. He described workers' compensation pricing as having 'moderated' and noted that a recent advisory rate increase recommendation in California suggests pricing may be near a bottom. He reminded that the staffing business is a very small part of the overall company.

Vincent Colicchio asked about the growth prospects for the PEO staffing business and whether health care brokers are becoming a more productive source of client referrals.

Answer

CEO Gary Kramer confirmed that the company is positioned to consistently grow its PEO recruiting business, as it is gaining good penetration with its installed client base and is used as a sales tactic for new business. He also noted that health care brokers are becoming a more productive referral channel, particularly during their busy season, as they realize BBSI can handle administration and free up their time to sell more.

Vincent Colicchio of Barrington Research Associates questioned how price escalators are being implemented in recent large deals and requested a performance update on the NurseGrid application, particularly its e-commerce results.

Answer

CEO Robert Frist confirmed that price escalators are now standard in nearly all new and renewed contracts and are being well-received. For NurseGrid, he detailed multiple monetization efforts, including NurseGrid Learn generating over $50,000 per month, a strategic partnership for student debt consolidation, and a new jobs function. He also highlighted NurseGrid's integration with the hStream platform's identity service to add more value for its growing user base.

Vincent Colicchio of Barrington Research Associates, Inc. questioned if HealthStream is experiencing pricing pressure and asked about the M&A environment, particularly regarding the impact of economic uncertainty on valuations.

Answer

Robert Frist, CEO and Chairman, responded that the company is managing pricing effectively through value-based bundling, as seen with the Competency suite. He also highlighted the successful implementation of 3-5% annual price escalators in all new contracts over the past 18 months. Regarding M&A, Frist noted that while deal flow has increased, valuations remain high. He confirmed HealthStream has been outbid on recent deals and will maintain its disciplined, conservative approach, leveraging its strong, debt-free balance sheet to find opportunities with the right strategic and economic fit.

Vincent Colicchio asked for an update on ShiftWizard's progress toward achieving the necessary feature set for the large organization market.

Answer

CEO Robert Frist estimated that by the end of Q2 of next year, ShiftWizard will not only have feature parity with the legacy ANSOS application but will be superior in terms of scalability and functionality. He also noted that the ShiftWizard revenue run rate is already higher than that of ANSOS, indicating the crossover has begun.

Vincent Colicchio of Barrington Research Associates asked about the sales pipeline's performance in the quarter, the nature of the sales force headcount decline, and specific actions being taken to improve deal conversion rates.

Answer

Chief Sales Officer Nate Swan clarified that the sales pipeline is strong, having grown 15% quarter-over-quarter, and the primary challenge is conversion, not pipeline generation. He explained that the sales force headcount decline is a mix of voluntary and involuntary turnover due to heightened performance management. To improve conversion, Swan stated the focus is on earlier manager involvement to better qualify buyers and establishing a 'social contract' to ensure buyer commitment, preventing reps from wasting time on deals unlikely to close.

Vincent Colicchio questioned the strength of visibility into the low end of the annual revenue estimate compared to the prior year. He also asked if the decline in total clients was still primarily concentrated among smaller clients and when that trend might reverse.

Answer

CFO Chris Finn affirmed that visibility is strong, particularly for the subscription business, and described the forecast as a balanced, non-recessionary view. CEO George Colony and CSO Nate Swan confirmed that client churn remains concentrated in smaller clients. They noted the primary reason for non-retention is a mismatch between the product and the client's persona or needs, an issue they are now addressing with more vigilance during the sales process. George Colony also highlighted single-seat contracts as an area for improvement.

Vincent Colicchio asked if Forrester's ability to penetrate senior levels within client organizations is meeting expectations. He also sought clarification on the cause of the significant client count decline in the quarter and questioned the most common pushback received from clients who are slow to expand their number of Forrester Decisions seats.

Answer

Chief Sales Officer Nate Swan responded that while progress in reaching senior executives is good, he would always like it to be faster, and noted the team is responding well to the new sales methodology. CFO Chris Finn clarified the client count decline was due to both the strategy of shedding smaller clients and a restatement of numbers following the divestiture of FeedbackNow, which CEO George Colony added accounted for 250 clients. Nate Swan identified 'budget' as the most common pushback for seat expansion, which he views as a signal to better demonstrate value and ROI.

Vincent Colicchio asked about Insight's labor strategy for capitalizing on the AI opportunity, including the role of M&A and whether valuations for AI targets are currently prohibitive. He also inquired about the current status of the company's ongoing profitability and pricing initiatives.

Answer

CEO Joyce Mullen outlined a two-pronged talent strategy: actively pursuing M&A and new hires for key AI, data, and cloud skills, complemented by an intensive internal development program to upskill existing employees. She also confirmed that the profitability and pricing initiatives started two years ago are well underway, having addressed low-hanging fruit and now being expanded to other regions.

Vincent Colicchio asked about the potential actions Insight would take if the market slows more than expected and whether the company assumes enterprise services spending will remain weak for the rest of the year.

Answer

CEO Joyce Mullen explained that the company has a playbook for a significant downturn that includes accelerating cost actions like increased offshoring and automation, highlighting a new internal AI initiative to improve SG&A leverage. Regarding services, she stated that Insight expects spending to begin improving in the second half of the year, following the recovery in product sales, albeit with a slight lag.

The analyst asked about the key drivers of growth, the performance of top vendors, the impact of large one-time deals, synergies from the Douglas Stewart acquisition, and any signs of economic headwinds.

Answer

The company confirmed that security and data center verticals continue to lead growth. The top 10 vendors are stable, while there is movement in the 10-20 range. A large deal was pulled from Q3 into Q2, boosting results, but organic growth was still strong without it. Synergies from the DSS acquisition are being realized through integration into the ERP and sales teams. The company does not see any economic headwinds, citing their small size in a large market and a strong pipeline of new vendors.

Vincent Colicchio of Barrington Research Associates inquired about the primary growth drivers, the performance of top vendors, the impact of large non-recurring deals, synergies from the Douglas Stewart acquisition, and any signs of economic headwinds.

Answer

CEO Dale Foster confirmed that security and data center technologies continue to lead growth. He noted that while the top 10 vendors are stable, new vendors like Darktrace are entering the top 20 and are expected to have a larger impact in the second half of the year. Foster acknowledged a significant, lumpy order from Vast Data was pulled into Q2 from Q3, which boosted results, but emphasized that the company still achieved strong organic growth without it. He also stated that the Douglas Stewart (DSS) integration is proceeding well, with teams and product lines being merged. Lastly, Foster mentioned the company is not currently observing any economic headwinds, successfully offsetting the loss of a vendor like Citrix by focusing sales efforts on other products.

Vincent Colicchio inquired about the primary growth drivers, the performance of top vendors, the impact of any large non-recurring deals, synergies from the Douglas Stewart acquisition, and potential economic headwinds.

Answer

CEO Dale Foster confirmed that security and data center segments continue to lead growth. He noted that while the top 10 vendors are stable, there is movement among the top 20, with new entrants like Darktrace expected to contribute more in the second half. Foster acknowledged a large Vast Data order was pulled from Q3 into Q2, boosting results, but emphasized that underlying organic growth remained strong. He also confirmed that synergies from the Douglas Stewart acquisition are being realized through system integrations and cross-selling. Lastly, Foster stated the company sees no economic headwinds, citing its small market position and a strong pipeline of new vendors.

Vincent Colicchio of Alliance Global Partners inquired about the productivity of the new vendors added during the year, asking for a characterization of their performance.

Answer

Dale Foster (executive) explained that all 13 vendors signed during the year are operational. He emphasized the rigorous upfront vetting process and noted that underperforming vendors are moved to a special team. As a specific example of success, Foster highlighted the new partnership with Scality, which has already generated approximately $2-3 million in business since its launch.

Vincent Colicchio of Alliance Global Partners inquired about the productivity of the 13 new vendors signed during the fiscal year.

Answer

Executive Dale Foster explained that all new vendors are active following a rigorous vetting process designed to ensure a good fit before signing. He noted that while the company works to quickly identify and address underperforming partnerships, some new vendors are already showing strong results. For example, the recently signed partnership with Scality has already generated approximately $2 million to $3 million in business.

Vincent Colicchio of Alliance Global Partners inquired about the key technology segments driving growth, the sustainability of SG&A efficiency, the DACH region as an M&A priority, and a potential pause in acquisition activity.

Answer

CEO Dale Foster identified VAST Data as a significant contributor outside of the dominant security sector, which continues to see strong inbound interest. CFO Andrew Clark affirmed the goal of maintaining SG&A as a percentage of Adjusted Gross Billings (AGB) around 3% by leveraging scale. Dale Foster confirmed the DACH region is a key M&A target and stated the company plans to continue its pace of one to two acquisitions per year without a pause.

Vincent Colicchio of Alliance Global Partners inquired about the key technology segments driving growth beyond security, the sustainability of SG&A efficiency, the DACH region as an M&A priority, and a potential pause in the acquisition cadence.

Answer

CEO Dale Foster identified VAST Data as a significant growth driver, noting its lumpy but sizable orders. He confirmed security remains a primary driver, with two-thirds of evaluated vendors having a security focus. Foster also affirmed the DACH region is a priority for M&A and stated the company plans to continue its pace of one to two acquisitions per year. CFO Andrew Clark added that the goal is to maintain SG&A as a percentage of AGB in the 3% range, leveraging scale from recent acquisitions while continuing to invest in growth.

Vincent Colicchio inquired about the specific drivers behind the strong performance in the APJ (Asia-Pacific Japan) region and whether that level of growth is sustainable.

Answer

CEO Patrick Zammit explained that the strength in APJ was broad-based, with notable contributions from consumer business in Japan and B2B business in India. He expressed confidence in continued solid growth and profit generation, citing the company's low market share in the region and a strategic focus on higher-margin segments.

Vincent Colicchio from Barrington Research asked why the peripherals category was not strong despite robust PC sales and what the forward-looking outlook is for that business.

Answer

CEO Patrick Zammit attributed the weakness in peripherals to two main factors: continued challenges in the printing market and a strategic decision to exit a large, unprofitable peripherals contract in North America. He stated that the company is now actively seeking new, more profitable business in the SMB segment to rebuild the category.

Vincent Colicchio asked for more details on the new Canada tax product, including its pipeline and competitive positioning, as well as a general update on the competitive environment.

Answer

CEO Patrick Goepel explained the Canada tax product was driven by demand from new enterprise partners like Strata and Venture for their North American footprints. He noted they are already seeing inquiries and adoption from existing clients. On the competitive front, Goepel stated there is 'no change' in the environment, with strong new engagements, though enterprise sales cycles have elongated slightly.

Vincent Colicchio asked for the specific bookings growth rate in Q4, whether the new partnership with a major tax and audit firm is exclusive, and the expected timeline for that partnership to ramp up.

Answer

CEO Pat Goepel reported that Q4 bookings growth was 28%, driven by the core payroll business. Regarding the new audit firm partnership, he stated they are already pursuing deals together but that significant revenue is more likely a 2026 event, though some could materialize in late 2025. He did not comment on the exclusivity of the agreement.

Vincent Colicchio asked for the breakdown of sales bookings between new logos and existing clients.

Answer

CEO Patrick Goepel stated that the current bookings mix is approximately 70% from new clients and 30% from existing clients. He noted a long-term strategic goal to 'flip that' ratio by driving more cross-sell and upsell revenue, leveraging the company's significantly expanded product portfolio, which increased its potential revenue per employee per month from ~$40 to ~$165.

Vincent Colicchio asked for an estimate of the revenue percentage tied to AI in fiscal 2026. He also inquired if access to skilled AI labor is a limiting factor for growth and questioned the cause behind the recent spike in the attrition rate.

Answer

CEO Keshav Murugesh estimated that AI-related models currently contribute close to 5% of revenue and expects this to increase, though he did not provide a specific fiscal 2026 target. He stated that access to skilled AI labor is not a limiting factor, citing a strategy of hiring in key markets and acquiring talent through M&A like Kipi. Executive David Mackey addressed attrition, explaining the spike was not concerning, focused at the entry-level, and that the rate tends to be volatile quarter-to-quarter.

Vincent Colicchio from Barrington Research asked about the expected relationship between headcount growth and revenue growth for the rest of the year. He also inquired if the impressive pipeline of large, transformational deals is expected to continue expanding.

Answer

CEO Keshav Murugesh explained that Q1 headcount grew to support Q4 deal wins, but utilization will improve as a major healthcare client ramps down in Q2. Executive David Mackey added that due to the technology-enabled nature of the ramp-down, revenue will decrease more than headcount, but aggressive hiring will be needed to support new deal ramps. On the deal pipeline, Murugesh stated that focusing on large, transformational deals is the "new way of business for WNS for the long term," created by senior-level engagement. Mackey emphasized that the pipeline of deals over $10M in ACV is a new, additional layer of opportunity for the company.