Mindtree QFY22 Conference Call Highlights

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• A Very Strong QoQ (12.8%) and YoY (34.3%) revenue growth.
• LTM attrition has increased from the previous quarter by 17.7%.
• Cloud consists of 18.7% of revenue.
• Company is confident of delivering industry-leading double-digit revenue growth on the back of strong deal wins. Healthy deal pipeline, and broad-based revenue growth.
• Guidance for the EBITDA margins is 20%+ in FY22.
• Deal wins remained healthy in Q2 at USD360 million, but it fell from a record USD504 million in Q1. Management indicated that the deal intake remains well-balanced across annuity and transformational deals.
• Q2FY22 EBITDA margins expanded 20bps QoQ to 20.5% due to revenue acceleration. operating efficiencies (+190bps). Partly offset by wage hikes (-140bps) and the cross-currency (-30bps) impact. The company is confident of sustaining margins above 20% on the back of sustained revenue growth momentum. Benefits accruing from work from the home shift, workforce addition and offshore shift. These factors should negate the impact of 1) rising costs of talent. 2) higher subcontracting costs considering strong demand and tight job markets. 3) investments in front-end sales and identified white space opportunities.
• Mindtree’s strategy to focus on the annuity business and cross-selling. Up-selling to strategic clients continue to deliver desired results, with revenue growing 12.8% sequentially.
• Management indicated that strength in Retail, CPG, and Manufacturing was partly seasonal as businesses. Just started opening up for retail and in-person shopping after an extended lockdown. The Top client remained flat QoQ.
• Management expressed confidence in growing the top account and widening. The growth base by expanding relationships with another strategic account.
• Outlook: The company is confident that it will maintain growth momentum in H2 on the back of a robust pipeline. A healthy demand environment, but seasonality might kick in during Q3 due to holidays and furloughs. The company has maintained the EBITDA margin guidance of over 20% in FY22.

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