Mphasis (526299) Q3 24/25 earnings summary

Executive summary

• AI-led transformation and modernization initiatives are accelerating, with platforms like NeoZeta and NeoCrux driving productivity and 55% of the pipeline now AI-led, resulting in significant wins in AI Ops and AI Modernization.

• Q3FY25 saw record TCV closures at $351 million, the highest in six quarters, with five large deals signed and broad-based pipeline growth across verticals and client segments.

• BFS and TMT verticals led revenue growth, supported by wallet share gains, new client ramp-ups, and strong order book.

• Execution rigor maintained operating margin within the target band of 14.6% to 16%.

• Investments in talent, GTM, and cybersecurity (Cyber Fusion Center) are enhancing capabilities and client offerings.

Financial highlights

• Q3FY25 revenue was $421 million, up 0.5% sequentially and 4.6% YoY in constant currency; direct business contributed 96% of revenue.

• Operating margin held steady at 15.3%, within the target range; EBITDA margin also at 15.3%.

• EPS for Q3FY25 was INR 22.6, up 1% sequentially and 14.1% YoY.

• Net profit for Q3FY25 was ₹4,278 million, up 1.1% QoQ and 14.5% YoY.

• Operating cash flow exceeded PAT, with OCF/PAT ratio above 100% for the quarter; DSO improved to 72 days.

Outlook and guidance

• Expecting Q4 to be the strongest sequential growth quarter in three years, with above-industry growth for FY 2025, leveraging strong TCV wins and improved TCV-to-revenue conversion.

• Margin guidance remains at 14.6%-16%, with continued focus on pipeline conversion and sustainable growth.

• Recovery in discretionary spend and mortgage business is visible, with macro environment turning favorable for BFS.