Slide 1: Investor Update Q4 2016
Passionate Employees Investor Update Innovative Services Q4 2016 Delighted Customers 07 Feb 2017 © Hexaware Technologies. All rights reserved. www.hexaware.com
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements on this presentation concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and un
Slide 3: Business Update
Business Update © Hexaware Technologies. All rights reserved. | www.hexaware.com 3
Slide 4: Key Financials for Q4 2016
Key Financials for Q4 2016 GROWTH GROWTH Q4 2016 Q3 2016 QoQ YoY Revenue 138.95 135.24 2.7% 12.0% EBITDA* 24.78 24.65 0.5% 24.8% (before ESOP Cost) EBITDA 23.96 23.58 1.6% 21.4% (after ESOP Cost) PAT 17.93 16.67 7.5% 22.1% EPS Diluted ** 3.99 3.66 0.33 0.72 * Excludes ESOP Cost of $0.82 M in Q4 and
Slide 5: Revenue Analysis - QoQ
Revenue Analysis - QoQ 3.3% Volume Growth 145 8.43 140 (2.65) 0.21 138.9 (1.20) (0.17) (0.91) USD Mn---------------> 135.2 135 130 Increases Decreases 125 120 Volume Bill Rates Revenue Q4 16 Revenue Q3 16 Mix Calendar Furloughs FX - © Hexaware Technologies. All rights reserved. | www.hexaware.com 5
Slide 6: Gross Margin Analysis - QoQ
Gross Margin Analysis - QoQ 37.00 1.26 36.50 36.2 36.00 (0.62) %---------------------> 35.50 (0.75) (0.47) 0.18 35.2 SG&A 70 bps QoQ 35.00 (0.12) (0.53) • SG&A at $ 24.0 mn in Q4 16 vs $24.3 34.50 mn in Q3 16 Increases • Increment : (7) bps • Forex : 9 bps 34.00 Decreases • Lower SG&A% mainly on a
Slide 7: Movement of Top Customers
Movement of Top 20 Customers Top 20 Accounts by Revenue for the Quarter Q4 2016 vs. Q3 2016 In Out • Top Skincare Lines • Leading Airline • Major Telecommunications • Global Banking and Operator Financial Services Co. • American Investment • Multinational Insurance Firm Management Firm • Multination
Slide 8: Improved Depth of Customer Relationships
Improved Depth of Customer Relationships Q4 2015 Q4 2016 GROWTH TOP CLIENTS QoQ $50+ 1 3 Top 5 Clients 1.2% $30 - $50 3 0 Top 10 Clients 1.0% $20 - $30 0 2 Top 20 Clients 1.9% $10 - $20 5 3 $5 - $10 7 6 $1 - $5 53 64 >$1 69 78 Last twelve months revenue © Hexaware Technologies. All rights reserved.
Slide 9: Strategy Proof Points
Strategy Proof Points USD 55 million NN Deal wins in Q4-16 Next Gen Application Modernization and Support for a Shrink IT Specialized Payment products and services Provider Won from top 3 IOP Automation-led Service Integration and Service Shrink IT Management for one of the top ten global Steel Comp
Slide 10: Employee Metrics
Employee Metrics UTILIZATION * EMPLOYEE ATTRITION Utilization back to high levels Significant efforts taken to contain attrition 78.6% 17.4% 16.9% 16.6% 17.1% 16.0% 16.6% 16.5% 16.1% 74.1% 73.0% 73.6% 14.1% 72.1% 70.4% 69.7% 69.6% 70.0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015
Slide 11: North America led Growth
North America led Growth APAC, ANNUAL Europe, 6% GROWTH GROWTH GEOGRAPHY GROWTH 11% QoQ YoY YoY North America 3.4% 14.3% 10.0% Europe (1) -1.4% -1.0% -1.7% North APAC 1.7% 8.3% 6.4% America, 83% TOTAL 2.7% 12.0% 8.3% (1) In constant currency terms, Europe grew 3.0% QoQ and 7.9% YoY; and © Hexaware T
Slide 12: Healthcare & Insurance led QoQ Growth
Healthcare & Insurance led QoQ Growth ANNUAL Manufacturing & GROWTH GROWTH VERTICAL GROWTH Consumer, and QoQ YoY Others, 28% Banking & Financial YoY Services, 42% Banking & Financial 3.9% 25.6% 18.2% Services Travel & -6.4% -10.8% -7.5% Transportation Healthcare & 5.5% 6.2% 11.2% Healthcare & Insura
Slide 13: IMS led Growth
IMS led Growth ANNUAL GROWTH GROWTH HORIZONTAL (1) GROWTH QoQ YoY YoY Application Development BPS, 6% IMS, 7% 4.0% 7.0% 5.2% & Maintenance (ADM) BIBA, 14% ADM, 38% Enterprise Solutions (ES) -0.4% -0.9% -2.8% Digital Assurance/ Testing 6.1% 13.7% 6.4% (DA) Business Intelligence & -4.6% 12.3% 9.8% Ana
Slide 14: Impact of Changing Environment on Immigration
Impact of Changing Environment on Immigration © Hexaware Technologies. All rights reserved. | www.hexaware.com 14
Slide 15: Summary
Summary There has been no executive action or legislation signed yet Executive action has an important sphere of influence, but important changes need legislative action There are two competing bills on immigration reform • One is by Democrat is less likely to be heard • The other is bi-partisan; th
Slide 16: Background – Executive Action
Background – Executive Action Executive Action has an important sphere of influence Current draft of Executive Action proposes: • Within 90 days, review of all regulations to determine which of the regulations violate immigration laws or are otherwise not in the national interest. • Review of parole
Slide 17: Background – Legislative Action
Background – Legislative Action But larger changes need legislative action Two Recently Introduced H-1B Related Bills HR 170 – The Protect and Grow American The High-Skilled Integrity and Fairness Act Jobs Act (introduced January 4, 2017) (introduced January 24, 2017) 1. Co-sponsored by Rep. Darrell
Slide 18: Hexaware Facts
Hexaware Facts Total Cumulative Count Added In 2016 Visa Avg. Salary Avg. Salary Count % Count % (basis H1 Cum.) (basis H1 Cum.) H1 782 46% 100 316 43% 97 L1 (70% L1A) 285 17% 100 86 12% 89 Citizens, GC & Others 620 37% 109 340 46% 88 Total 1687 100% 103 742 100% 92 • We have provided 2016 increment
Slide 19: Our View
Our View We are in no position to predict legislative changes in the US, but are monitoring developments very closely A range of actions are possible with different outcomes, but the following represents our view of elements with higher probability to be part of any change • Change will be prospecti
Slide 20: Our Strategy
Our Strategy 2016 already saw reducing dependence on H1B Our channels of fulfilment include lateral hires in the US, hiring and training college grads, and transferring staff from our Mexico delivery center We will continue to develop other channels, with the highest focus being on recruitment and t
Slide 21: Outlook 2017
Outlook 2017 Revenue likely to grow at 10% - 12% EBITDA growth likely to be in-line with Revenue growth Growth inclusive of top 5 client’s decision to insource (H2 impact) Dividend Payout expected to be in-line with Q4 2016 © Hexaware Technologies. All rights reserved. | www.hexaware.com 21
Slide 22: Financial Update
Financial Update © Hexaware Technologies. All rights reserved. | www.hexaware.com 22
Slide 23: Revenue
Revenue Q4 2016 constant currency revenue at $139.9 mn; 3.4% QoQ; 13.2% YoY Q4 16 $ Revenue at $138.9 mn; 2.7% QoQ; 12.0% YoY Q4 16 INR Revenue at RS 9,409 mn; 4.1% QoQ; 14.8% YoY © Hexaware Technologies. All rights reserved. | www.hexaware.com 23
Slide 24: Outstanding Hedge Position and Rates
Outstanding Hedge Position and Rates Outstanding Hedge Position Currency Pair Amount (Mn.) Avg. Rate USDINR ($) 141.82 72.57 EURNR (€) 4.20 81.26 GBPNR (£) 4.20 101.71 Total ($) 151.41 Note - 1.Hedges outstanding are full-term hedges. 2. EUR converted @ 1.0550/USD & GBP converted @ 1.2287/USD. 3. Av
Slide 25: Forex Gain/(Loss)
Forex Gain/(Loss) 1.85 Total Gain/(Loss) • During the quarter, forex gain was $ 1.85 Mn, this was USD Mn-----------> almost double the gain of $0.95 Mn recorded in Q3’16 1.05 • Forex gains expected are 0.77 ~$ 0.77 Mn in Q1’17 and ~$ 1.05 Mn in Q2’17 at exchange rate of INR 67.9250/USD Q4'16 Q1'17 Q
Slide 26: Balance Sheet Updates
Balance Sheet Updates CASH & CASH EQUIVALENTS Cash and Cash Equivalents* at US$ 65.99 Mn (INR 4,482 Mn) DAYS SALES OUTSTANDING Days Sales Outstanding (DSO) for Q4 2016 at 43 days; 68 days including unbilled DIVIDEND INR 1.00 per share (50%) Dividend Payout including taxes INR 363.5 Mn ($ 5.35 Mn) ©
Slide 27: Capex 2016
Capex 2016 US$ Mn Q4 16 YTD Siruseri Phase II 2.1 14.2 Hinjewadi - Phase I 5.6 11.5 Computers & Equipments & Others 1.5 7.4 Grand Total 9.2 33.1 US $24 Mn of Capex expected in 2017; includes $9 Mn of spillover from 2016 Tax: ETR at 25.1% in Q4 16 vs 25.8% in Q3 16 – due to in SEZ profit © Hexaware
Slide 28: Thank You
Passionate Employees Innovative Thank You Services Delighted Customers © Hexaware Technologies. All rights reserved. www.hexaware.com