Guidance and Pipeline Conversion
Q: Are pipeline conversion delays affecting the guidance range?
A: Yes, delays in pipeline conversion have led us to set a wider Q4 guidance range of 0% to 7.5% sequential growth, excluding any contribution from GalaxE. We've become more conservative due to slower conversion rates and clients constraining budgets, resulting in cautious assumptions for Q4.

Margins Outlook
Q: Is the fiscal second quarter the trough in margins?
A: No, we expect margins to bottom in Q3, with adjusted PBT likely falling below 10% due to ongoing investments and slight weakness in gross margin. However, we anticipate improvement in Q4 as our optimization program takes effect and revenue grows sequentially, aiming for low double-digit adjusted PBT.

GalaxE Acquisition Impact
Q: How does the GalaxE acquisition affect growth and margins?
A: The GalaxE deal is strategic, expected to add 4% to our full-year growth guidance upon completion. It makes the U.S. our largest client revenue region and adds valuable India delivery capability. While initial investments are needed, we anticipate it to be earnings neutral in the near term and earnings positive thereafter.

Business Optimization Program
Q: Can you share details on the planned cost-saving measures and layoffs?
A: We plan to cut about 450 positions, incurring termination costs of GBP 7.5 million and generating annual savings of GBP 23 million. This involves addressing overlaps in SG&A and optimizing our bench due to pipeline delays, ensuring minimal disruption to delivery.

Demand Environment and Client Budgets
Q: Are client budget delays impacting revenue, and when is an upturn expected?
A: Clients' IT budgets are up, but spending is delayed due to hesitancy. We've not seen base erosion, and larger deals have increased in number and value, up by 75% compared to November. Signs in February suggest clients are starting to ease, giving us confidence in an upturn later in the year.

Impact on Key Clients Mastercard and Worldpay
Q: How are spend reductions from Mastercard and Worldpay affecting you?
A: We're facing headwinds with both clients. Mastercard's non-Vocalink work has budgets flat or below FY '23 levels, impacting anticipated growth. Worldpay's spend is slightly delayed, with no concrete plans yet, resulting in flat expectations.

Pricing Trends and Diversified Delivery
Q: Are clients pushing for price declines, and how is diversified delivery helping?
A: Pricing remains stable, even seeing small increases. Diversifying delivery to cost-effective locations like India allows us to access new work and balance pricing without rate reductions. This strategy is driven by competitive pricing needs rather than geopolitical risks.

Investments Impacting Margins
Q: How are near-term investments affecting margins and utilization?
A: We're investing in sales, marketing, and M&A integration, which pressures Q3 margins. Utilization was about 67% in Q2 and may dip slightly in Q3 before improving in Q4. These investments currently represent about 6% of revenue.

Embedded Payments Demand
Q: Is there growth in embedded payments opportunities?
A: Yes, embedded payments is a strong area where clients continue to invest. They're focusing on open banking and embedded payments for higher-margin propositions, leading to new work for us.

GalaxE Growth Prospects
Q: Can GalaxE match your 20% revenue growth outlook?
A: Yes, GalaxE is growing at 10% to 15%, and we believe, combined with us, there's potential to accelerate growth to near 20%. Cross-fertilizing capabilities and expanding scale should enhance growth opportunities for both businesses.