Bookings and large deal momentum
Q: Tien-Tsin Huang from JPMorgan asked how bookings came in versus plan and how the backlog and pipeline look compared to last year.
A: Ravi Kumar, CEO, stated that trailing 12-month bookings grew 4%, deals over $100 million grew 9%, and new bookings increased from 48% to 60% of the mix, leading to faster revenue translation while maintaining a 1.3 book-to-bill ratio.
Q: Tien-Tsin Huang from JPMorgan asked to elaborate on the 40% of the business seeing AI tailwinds and whether organic growth there is two to three times faster.
A: Jatin Dalal, CFO, confirmed that service lines benefiting from AI tailwinds include BPO, infrastructure, cybersecurity, and industry solutions, which together account for approximately 40% of the portfolio and grow faster than the rest of the business.
Guidance outlook and discretionary spending
Q: Jason Kupferberg from Wells Fargo asked how to think about organic constant currency growth relative to 2027 and whether fourth-quarter exit rates are a reasonable proxy.
A: Jatin Dalal, CFO, noted that the fourth-quarter midpoint guidance of 4% positions the company at the top tier of performance and that it is too early to comment on 2027, though exit rates remain higher than most large peers.
Q: Jason Kupferberg from Wells Fargo asked for details on the rescoping and lower severance costs within Project LEAP.
A: Jatin Dalal, CFO, and Ravi Kumar, CEO, explained that the lower personnel costs reflect successful internal reskilling and redeployment, with over 25,000 employees earning advanced AI certifications, allowing savings to be captured in revenue growth rather than cost reductions.
Macro headwinds and discretionary recovery
Q: Jim Schneider from Goldman Sachs asked what is required for discretionary spending headwinds to lift heading into 2027.
A: Ravi Kumar, CEO, responded that macro and geopolitical stability will trigger discretionary recovery, noting that financial services has already pivoted to AI growth while health care will stabilize as Medicare and Medicaid regulatory uncertainty eases.
Q: Jim Schneider from Goldman Sachs asked about the ability to sustain gross margin expansion for the full year of 2027.
A: Ravi Kumar, CEO, and Jatin Dalal, CFO, stated that the thesis of being in the winner's circle for growth, expanding gross and operating margins, and driving EPS growth faster than revenue remains intact, supported by LEAP tailwinds, pricing, higher offshore mix, and high utilization.
Resale revenue and solution strategy
Q: James Faucette from Morgan Stanley asked about resale revenue growth slowing down in the December quarter and the strategic rationale for bundling solutions.
A: Jatin Dalal, CFO, stated resale revenue remains in a similar range as a percentage of growth, while Ravi Kumar, CEO, added that bundling infrastructure, software, and AI inference is integral to owning customer outcomes and integrating human and machine effort.
Q: James Faucette from Morgan Stanley asked for an update on the potential India primary offering and secondary listing.
A: Jatin Dalal, CFO, replied that the company is awaiting draft regulations expected in a few weeks before making a final decision.
Fourth-quarter seasonality and guidance assumptions
Q: Jonathan Lee from Guggenheim Securities asked what is driving the change in furlough assumptions for the fourth quarter and what is baked into the high and low ends of guidance.
A: Jatin Dalal, CFO, explained that fourth-quarter furloughs returned to normal seasonal levels rather than the lower levels previously anticipated, and the guidance midpoint assumes steady execution while the range accounts for potential macro variations.
Q: Jonathan Lee from Guggenheim Securities asked about normal seasonality from fourth quarter to first quarter on an organic services basis.
A: Jatin Dalal, CFO, stated that historically performance between fourth and first quarters has been flat to similar, and it is too early to provide specific 2027 details until the January call.
