HCL Technologies

FY26 EBIT-margin guidance was reiterated at 17.0%–18.0%. Q2 FY26 EBIT margin was 17.5%, within the guided range, although the full-year target remains outstanding. (4 in progress, 1 revised across 5 tracked commitments)

Management delivered the promised guidance increase, raising Services growth guidance above the earlier 4%-5% range. (1 exceeded, 2 missed, 2 revised across 5 tracked commitments)

The FY26 full-year EBIT margin is not explicitly disclosed in this Q1 FY27 release. However, the reported FY26 quarterly margins were 17.5% in Q2, 19.4% in Q3 and 17.7% in Q4, with Q3 affected by a one-time New Labour Codes item. The document does not provide sufficient evidence to confirm the full-year 17%-18% target was met; Q1 FY27 performance cannot be used as FY26 delivery evidence. (1 missed across 1 tracked commitment)

Increase the net-new bookings run rate from approximately $2 billion toward approximately $2.5 billion. — target: Approximately $2.5 billion net-new bookings run rate

Expand telecom engineering capabilities and client access through the acquisition of HPE's Telco Solutions Business. (+1 more commitment)

HCLTech's workforce and customer scale expanded. Employees increased from 219,401 to 223,151, while the number of $50M+ clients rose from 48 to 54 and $20M+ clients from 133 to 144. This supports stronger ability to win and deliver large, multi-country contracts. (1 expanding, 3 stable)

IT and Business Services remained HCLTech's largest business line, but its revenue share was slightly lower than a year earlier. Constant-currency growth was modest at 3.0% year on year, while EBIT margin declined materially from 16.6% to 15.1%. (1 contracting, 2 expanding)

The USA remained the largest Services geography, but its share declined from 59.6% to 56.5%. Growth was only 0.5% year on year in constant currency, making the geographic mix less concentrated in the USA. (2 contracting, 2 stable, 1 shifted)

HCLSoftware represented approximately 9.1% of Q2 FY26 revenue ($333M of $3,644M), versus 8.6% in the Q1 FY27 baseline. The segment contracted 3.7% year on year in constant-currency terms in Q2 FY26, while the baseline reported a larger 5.3% decline. Therefore, the segment share increased slightly, but the business remained in contraction. Within Software, subscription, support and professional-services revenue grew 8% year on year, while perpetual-license revenue declined. (2 expanding, 3 contracting across 1 engine)

HCLTech has a cost advantage from its large India-based workforce and global delivery network. Employee benefits were 56.9% of revenue in Q1 FY27, while revenue per employee increased to $65.5K annually. This operating model supports a 16.9% consolidated EBIT margin and 40.7% return on invested capital, though the cost advantage is partly offset by 14.8% outsourcing costs.

AI Force deployments increased from 35 accounts in the prior quarter to 47 accounts in Q2 FY26, a 34% sequential increase. HCLTech is targeting deployment across 100 top clients, implying 53 additional target accounts from the current base. This is a clear accelerating customer-adoption signal. Other offerings are described qualitatively, with AI Factory demand strong and teams being scaled. (2 accelerating, 3 new trend across 5 signals)

New-deal TCV was $1.812B in Q1 FY26. The document provides only the current-quarter figure, so the trajectory cannot be measured across quarters; this is a new tracking point for this document. (1 new trend, 4 accelerating across 5 signals)

Advanced AI revenue crossed $100M in Q2 FY26, but the document provides no comparable Advanced AI revenue or growth rate for earlier quarters. This is a newly disclosed growth signal rather than a multi-quarter acceleration assessment. (3 new trend, 1 accelerating across 4 signals, 1 leading indicator)

Financial Services growth accelerated from 4.9% in Q4 FY25 to 6.8% in Q1 FY26. Technology and Services remained strong at 13.7%, while Retail and CPG slowed from 10.0% to 8.2%. Public Services weakened from 1.0% to negative 2.4%. Overall, the growth picture is diverging by vertical rather than broadly accelerating. (1 decelerating, 2 accelerating, 1 new trend, 1 steady across 5 signals)

HCLSoftware ARR improved from $1.014B in Q1 FY25 to $1.033B in Q4 FY25 and $1.057B in Q1 FY26. Year-on-year ARR growth moved from -0.3% to 1.8% and then 1.3%. The recurring-revenue base is recovering, but the latest growth rate eased slightly from the prior quarter. (2 steady, 2 decelerating, 1 reversing across 5 signals)

In Oct 2025, bookings were strong at $2.6 billion, but management disclosed that only five of the top ten renewals had increased annual contract value, while the other five had deflation in specific statements of work. Management also stated that bookings generally correlate with revenue with a one-to-two-quarter lag. The later baseline still cites strong bookings but weak revenue growth, confirming that conversion and ramp-up remain a material risk. The risk is therefore stable at medium severity. (1 stable, 1 intensifying)

The workforce shrank sharply during the quarter while attrition increased slightly. A smaller employee base may support margins in the short term, but it can also limit the company's ability to staff new AI and transformation projects and may increase dependence on subcontractors. [EXECUTION]

Geographic concentration was evident in Jan 2026: the USA and Europe were the largest reported markets, although the transcript gave growth rates rather than revenue shares. US growth was only 1.5% YoY in constant currency, while Europe grew 4.6%; India and the rest of the world grew faster. The Jul 2026 baseline quantified the concentration at 83.6% of services revenue, with the USA at 56.0% and Europe at 27.6%. Thus, concentration remained a high and increasingly clearly quantified risk. (1 intensifying)

The Jan 2026 position was strong: Engineering and R&D Services grew 10.8% YoY and 3.1% QoQ in constant currency, and bookings were driven significantly by applications and engineering services. Nevertheless, management said traditional manufacturing remained muted and automotive and mobility demand had only stabilised, not clearly returned to structural growth. By the Jul 2026 baseline, Engineering and R&D Services had declined 3.7% QoQ and grown only 0.3% YoY. The risk therefore intensified sharply. (1 intensifying)

Q1 FY26 bookings were $1.812 billion, but constant-currency revenue declined 0.8% quarter on quarter, showing that deal wins had not yet translated into sequential growth. The later baseline reports substantially higher bookings of $2.407 billion but still declining revenue, confirming a widening conversion/timing gap. The risk intensified. (2 intensifying, 2 stable)