HCLTech Reports Strong Revenue Growth of 3.7% Year-On-Year in Q1 FY26

HCLTech's Revenue Growth: A Comprehensive Analysis



HCLTech has made a remarkable announcement regarding its financial performance for the first quarter of FY26, ending June 30, 2025. The global tech leader reported a year-on-year revenue growth of 3.7% in constant currency terms, with an impressive dollar revenue of $3.55 billion, marking a 5.4% increase from the same period last year.

The robust growth is a testament to HCLTech's enduring position as a major player in the tech industry, driven by a diverse portfolio of services that address the evolving needs of its clients. Notably, the company reported its EBIT margin at 16.3%, reflecting a slight variation due to investments in AI and Go-To-Market strategies. C Vijayakumar, the CEO and Managing Director of HCLTech, emphasized this growth trajectory by stating that the company's AI propositions are resonating well with clients, further enhanced by collaboration with OpenAI.

Digital Services emerged as a significant contributor to the company's revenue, showcasing an impressive growth of 15.2% YoY, which now accounts for 41.6% of HCLTech’s overall service revenue. Additionally, the Engineering and R&D services segment posted an 11.8% increase, demonstrating the broadening scope and success of the company's service offerings.

In regard to their Annual Recurring Revenue from HCLSoftware, the company recorded $1.06 billion, a modest increase of 1.3%. The strong pipeline of new deals, valued at $1.8 billion for the quarter, exemplifies HCLTech's proactive approach to securing contracts and expanding its service realms.

This quarter also marked the company’s 90th consecutive dividend payout, demonstrating strong cash generation capabilities with an Operating Cash Flow to Net Income ratio at an impressive 129%, and a Free Cash Flow to Net Income ratio of 121%. These figures indicate a solid financial footing and underscore the stability of HCLTech's business model.

Strategic Deals and Growth Segments


HCLTech secured several key partnerships during this quarter, showcasing its commitment to enhancing operational efficiency and customer experiences:
1. Modernizing IT Operations: A leading hospital chain in the US has chosen HCLTech to enhance its IT operations and patient outcomes, leveraging the full-stack portfolio.
2. Accelerating Digital Transformation: A major payment technology company has opted for HCLTech’s assistance in enhancing its global operations and product offerings through innovative solutions.
3. SAP S/4HANA Implementation: HCLTech expands its strategic relationship with a US-based consumer goods firm to implement enterprise application services.
4. GenAI-powered Solutions: Collaboration with a global sports body aims at developing a commentary enhancement platform utilizing GenAI, transforming live broadcasting with real-time insights.

Industry Growth and Recognitions


In terms of industry performance, HCLTech witnessed the highest growth in Technology and Services at 13.7% YoY, followed closely by Telecommunications, Media, Publishing, and Entertainment, with a 13% growth. The 'Rest of the World' category emerged as the fastest-growing region, increasing by 15.0%, with Europe showing an impressive growth of 9.6%.

Amid these achievements, HCLTech has received accolades such as ranking among Asia's Most Honored in Extel's Executive Team rankings and accolades for exemplary leadership from the American India Foundation. Furthermore, the company was honored at the AWS GenAI Premier League Awards for excellence in innovation and productivity.

Future Outlook


Looking ahead, HCLTech has increased its guidance for revenue growth in FY26 to a range of 3.0%-5.0%, while also revising its EBIT margin expectations to 17.0%–18.0%. As it continues to adapt in the fast-evolving technology landscape, HCLTech's ability to innovate and deliver on its promises positions it well for sustained growth.

In summary, HCLTech's Q1 FY26 results not only highlight its strong financial performance but also underline the strategic initiatives taken to enhance its service offerings and fuel growth across various sectors. The company remains a dependable partner for enterprises striving for digital transformation in the AI era.

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