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HCL Technologies Announces Q3 Earnings

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Key Highlights 

  • This quarter, HCL delivered a solid industry leading 5.6% sequential growth in constant currency. The growth was driven by services across Verticals and Geographies led by Mode-2 services that grew 13.1%, Mode-3 6.2% and Mode-1 3.9%. 
  • o   Mode 2 crosses US$ 1.5 bn run rate. The robust growth in Mode-2 Services was fueled by all the components that include Digital & Analytics, Security, IoT and Cloud Native services.
  • o   Mode-1 growth was driven by IMS, ERS and Applications, all of them demonstrating strong traction. − HCL continues its strong deal win momentum, signing 17 transformational deals this quarter, which are a mix of Mode 1 and Mode 2 services across all our service lines. These deals were led by sectors such as Financial Services, Technology & Services and Manufacturing. 
  • HCL’s strong growth at 13% YoY in constant currency, was broad based across Verticals led by Telecommunications, Media, Publishing & Entertainment 40.3%, Technology & Services 24.4%, Life Science and Healthcare 23.4%, Retail and CPG 21.5%. (on YoY Constant Currency basis) 
  • All geographies reported double-digit growth. Americas 12.9%, Europe 14.5% and RoW (ex-India) 12.1%. (on YoY Constant Currency basis) 
  • This quarter, HCL announced a definitive agreement to acquire select IBM software products for an aggregate value of US$ 1,775 mn. 
  • Operating Cash Flow / Net Income conversion at 95% (on LTM basis). 
  • Return on Equity at 25.1% and Return on Invested Capital at 28.7% (on LTM basis).
  • Dividend of ` 2 per share, 64th consecutive quarter of dividend pay out has been announced. FY’19 Guidance 
  • Revenue: FY'19 Revenues are expected to grow between 9.5% to 11.5% in Constant Currency * Revenue Guidance is based on FY’18 (April to March) average exchange rates. The above constant currency guidance translates to 7.9% to 9.9% in USD terms based on Dec 31, 2018 rates. 
  • Operating Margin (EBIT): FY’19 expected Operating Margin (EBIT) range is from 19.5% to 20.5%. – 4

“Digital & Technology innovations are causing disruptions to traditional models of not just business, but all aspects of our lives. Leveraging these innovations to exponentially enhance society’s potential and create solutions for its problems has been HCL’s guiding philosophy. Aided by a strong push on next-generation business, we continue to deliver value to all our stakeholders and remain at the forefront of supporting sustainability, diversity and inclusion for the industry.”, said Shiv Nadar, Chairman & Chief Strategy Officer, HCL Technologies Ltd. 

“Our revenues grew 5.6% sequential in constant currency, reflecting strong execution across our entire suite of services & products. We crossed US$ 1.5 billion run rate in our Mode 2 next generation offerings. We once again set a new bookings’ record this quarter. We are entering 2019 with a healthy growth outlook backed by the strong relevance of our propositions in the market.”, said C.Vijayakumar, President & CEO, HCL Technologies Ltd.

Corporate Achievements

  • HCL continues to create a sustained positive impact on the economic ecosystem it operates in, by powering enterprises, stakeholders and partners through next-gen digital transformational services, participative value creation and innovation driven initiatives.
  • HCL continues its strong deal win momentum, signing 17 transformational deals this quarter, which are a mix of Mode 1 and Mode 2 services across all our service lines. These deals were led by sectors such as Financial Services, Technology & Services and Manufacturing. The Mode 2 services business has now crossed US$ 1.5 billion annual run rate. 
  • HCL Technologies celebrated the 10-year anniversary of its first US-based Global Delivery Center, located in North Carolina, with Honorable Governor Roy Cooper, HCL’s senior leadership, customers, and members of state organizations and academia. In the spirit of social responsibility, HCL and its employees also made a contribution to the North Carolina Hurricane Irma Relief Fund. 
  • HCL launched its US Women’s Leadership Center, headquartered in Cary, NC. Following the success of the Women Lead Australia program, this is a critical step in HCL’s commitment towards Diversity and Inclusion, working with the ecosystem to facilitate STEM training, leadership development and mentorship opportunities for women. The Women Leadership Center will be a collabroration with eminent leaders from customers, communities, government, educational institutions, and HCL. 
  • HCL Technologies celebrated its 10-year anniversary in the Nordic region with Honorable Mikael Damberg, Minister for Enterprise and Innovation and India's ambassador to Sweden Ms Monika Kapil Mohta. The celebration coincided with the opening of a new office at HCL Nordic headquarters in central Stockholm. This year the Nordic region grew to become HCL’s largest market in Europe. Today, HCL employs more than 1,600 professionals in the Nordics representing 31 nationalities, with 55 large-scale transformational clients including four out of the six Fortune Global 500 companies in the region. 
  • HCL opened a new Delivery Center in Adelaide, inaugurated by Honorable David Ridgway, Member of the Legislative Council (MLC) of the Parliament of South Australia and Minister of Trade, Tourism and Investment Australia. HCL further expanded its global footprint by opening offices in Stockholm, Paris, Amsterdam and Ghent (Belgium). 
  • HCL was recognized as a “Gold Standard” organization by Investor in People for distinctive people practices this year. Investors in People is the international standard for people management, defining what it takes to lead, support and manage people effectively to achieve sustainable results. 
  • Continuing its tradition of ‘ideapreneurship’ and a culture of innovation, HCL filed 19 patents this quarter. Research, discovery and invention came from HCL professionals in next-generation technologies and platforms, including data analytics and simulation, automation and machine learning, among others.

For more detailed info on the Q3 earnings, please see the attached investor release

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