LTIMindtree Q1 Results: Revenue rises 2.5% to $1.1 billion
- The IT services firm says growth came primarily from its largest businesses, including banking, financial services and insurance and the technology, media and communications.
LTIMindtree Ltd, India’s sixth-largest IT company, on Wednesday said its April-June revenue rose 2.5% to $1.1 billion, its fastest sequential expansion since it came into existence in 2022, bolstered by growth in its key business verticals and the largest North America market.
The Mumbai-headquartered IT services company's growth came primarily from its largest businesses, including the banking, financial services and insurance (BFSI) and the technology, media and communications, which together make up almost 60% of the company’s revenue.
Its revenue was in line with median estimates of 27 analysts polled by Bloomberg, who expected the company to post $1.1 billion in quarterly revenue.
On the net profit front, the company fared better compared with the previous quarter.
The company reported a net profit of $136 million, up 3% sequentially. However, this growth was below the expectations of 25 analysts polled by Bloomberg who forecast the company to report a net profit of $139.08 million.
Also Read: LTIMindtree Q1 Results: Revenue rises 2.5% to $1.1 billion
Although LTIMindtree does not give quarterly or yearly revenue guidance, the management is optimistic of its prospects in the near term.
‘Green shoots of recovery’
“Though the market environment remains unchanged, we see some green shoots of recovery,” said Debhashis Chatterjee, managing director and chief executive officer of LTIMindtree.
“We are seeing early signs that they are beginning to deploy the savings and additional budget towards kicking off high priority transformation programs and making foundational investments for AI. We are seeing this play out more in BFSI and technology, media and communication, our largest verticals. Additionally, the ramp up in deals we had talked about in previous quarters is beginning to reflect in our revenue,” said Chatterjee.
LTIMindtree was formed in from November 2022 from the merger of L&T Infotech and Mindtree.
More than a third of the company’s business comes from the banking, financial services and insurance vertical. The company received $386 million, or 35.2% of the company’s overall revenue from the business. As of the three months through March 2024, the company earned $375 million of its revenue from banks and financial institutions.
The company got 75.1%, or $823 million of its revenue from North America, which is a $34 million increase from the quarter ended March 2024.
Also Read: Client caution may hurt LTIMindtree more than peers
“The momentum that we have generated in Q1 will pretty much continue into Q2,” said Chatterjee.
Even as its biggest business did well, the company’s growth was driven by the technology, media & communications vertical, which added $21 million in incremental revenue on a sequential basis, the most among all its five verticals.
The company surprised investors on the operating margin front, inching closer to its desired band of 17-18%. It reported a margin of 15% in rupee terms, which is 30 basis points higher on a sequential basis. The company did not change its stance on margins and also did not disclose by when it aimed to reach its desired margin band.
Much like peers that are navigating their artificial intelligence (AI) strategies, the company’s top management did not give a pipeline of business through the tech disruptor but said that the company was working on more than 150 engagements in the AI and Generative AI space.
“The way AI plus data plus cloud is playing out, it is becoming very pervasive, so it is not advisable to just try to associate revenues with such a pervasive phenomena that's happening,” said Chatterjee.
GenAI made waves in companies and industries across the world through its human replicating abilities such as audio, video, and written content creation as a result of prompts.
The company boosted its overall headcount by 284 in the June quarter to 81,934 employees.
However, analysts were not impressed.
“Headcount addition is low and the proportion of workers in client locations has also increased. We might also not see double-digit constant currency revenue growth for the year in the absence of mega deal wins,” said Kshitij Saraf, equities associate at Tusk Investments.
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