HCL Technologies Announces FY 18 Results : Annual Revenues cross Rs 50,000 Crores Mark

IT Services major HCL Tech has announced it Q4 and FY 18 full year results. Let's look at the numbers:

Revenue Milestones in FY’18 and Q4:

− Annual Revenues cross  Rs 50,000 crores mark.

− Quarterly Revenues exceed US$ 2 billion milestone.

Revenues from Mode 2 and Mode 3 offerings together grew 41.5% in 12 months period ending Mar’18. The share of Mode 2 and Mode 3 revenues together stands at 23.4% for FY’18, compared to 18.6% for FY’17.

− Led by Digital and Analytics, Mode 2 grew by 29.4% YoY across lines of business and geographies.

− In FY’18 Mode 3 contributed 8.7% to the revenue and grew at a healthy rate 68.3% YoY. Investments proposed in Product Management, R&D and GTM.  Broad based growth across Verticals driven by Manufacturing at 18.3%, Financial Services at 13.3%, Lifesciences & Healthcare at 8.1% , Retail & CPG at 7.5% and Public Services at 2.6% (on Constant Currency basis).

Strong client addition continues (on YoY basis): $5+ Mn clients up by 18, $10+ Mn clients up by 7, $20+ Mn clients up by 2, $40+ Mn clients up by 6, and $50+ Mn clients up by 3. Net Income to Operating Cash Flow conversion at 98.9% on LTM basis.

Announces dividend of ` 2 per share, 61st consecutive quarter of dividend payout. Return on Equity at 25.2%.

TRANSFORMATIONAL AND BLUE CHIP CUSTOMER ACQUISITION

HCL signed 15 transformational deals this quarter, spread across Mode 1, Mode 2 and Mode 3 services, led by verticals of Financial Services, Manufacturing, Public services, Lifesciences and Healthcare. These have a healthy mix of next–generation offerings including Cloud Native Services, Digital & Analytics, Internet of Things, Autonomics & AI, Cybersecurity & GRC, Products and Platforms. A total of 63 transformational deals have been signed during the year.

MARKET LEADERSHIP

MODE 1: CORE SERVICES

As part of Mode 1 services, HCL delivers core services in areas of Applications, Infrastructure, Engineering & R&D and Business Services, leveraging DRYiCETM Autonomics to transform clients' business and IT landscape, making them 'lean' and 'agile'.

Applications, Infrastructure and Business Services

HCL continues to leverage its strategic partnerships with leading enterprise software providers like SAP, Oracle, and Microsoft to deliver innovative solutions to its customers and continues to retain its market leadership position. With Digitalization and Internet-of-Things driving customer investment and playing critical roles in business success in the 21st Century, the Next Generation ITO framework enables “Multi-modal I.T.” to support these new initiatives while running lean operations, at the same time revolutionizing core areas like Datacenter & Cloud, Workplace Services and Networks. Recognized a star performer and leader in the industry, HCL Business Services has shifted the very grounds of operations outsourcing from cost optimization to technology-led Digital Transformation. In the last few months, HCL BServ has created a differentiated edge in the industry by leveraging Process Architecture and Technology Architecture coupled with the best in breed partnerships and investing across capability building both organically and inorganically.

• A US-based Fortune 500 Chemicals and Ammunition manufacturer has selected HCL to implement 21st Century Enterprise solutions for IUS, Cloud, EPS, Cybersecurity, NG Workplace and DRYiCETM across more than 25 projects aimed at transforming infrastructure and managed services.

• A leading UAE based aluminium smelter and manufacturing enterprise has chosen HCL for end-to-end infrastrcutrure managed services, SAP basis support, service desk, datacenter operations, security and network operations.

• HCL has renewed an application development, maintenance and transformation deal with a leading manufacturer based in Europe to provide the next generation of support and development services across enterprise applications, collaboration and digital platforms. The renewal will see the implementation of a pure outcome based services in an agile delivery model.

• HCL has signed a deal with a Fortune 500 multinational banking and financial services firm for robotic process automation that will lead to optimization and growth in business.

• A leading global reinsurance company has selected HCL as the partner for application support and development across Germany, America, Canada, UK and Australia, consolidating multiple vendors into one strategic partner.

• A leading US-based software services provider to communications and media companies, which offers innovative solutions and intelligent operations, has chosen HCL for business services around their order management, billing and activation processes.

Engineering and R&D Services

HCL, recognized as a leader by analyst firms in diverse domains, is the most valued global Engineering Service Provider (ESP) and partners with some of the most innovative and successful organizations in the world. With over four decades of experience of operating complex multi-vendor engagements and customer value chains, HCL seamlessly integrates with, and complements customers’ R&D activities. HCL is a preferred engineering partner for global companies with its ability to drive significant business impact and value through accelerated product launches, improved engineering efficiencies, and adoption of new and disruptive technologies.

• HCL has partnered with Xilinx to announce a solution that targets 5G access and mobile backhaul markets and enables telecom original equipment manufacturers (OEMs) to meet the stringent requirements of next-generation networks.

• HCL’s Platform for Acceleration of NexGen Engineering Analytics (PANGEA) has been chosen as the best in ‘Innovation in Data Science’ category by Aegis Graham Bell Award. ‘PANGEA’ is a collaborative and distributed Analytics platform built on industry leading big data technologies that brings the power of machine learning and predictive analytics to solve key business problems.

MODE 2: NEXT–GENERATION SERVICES

As part of Mode 2 services, HCL delivers experience–centric and outcome–oriented integrated offerings across Digital & Analytics, IoT WoRKS™, Cloud Native Services and Cybersecurity & GRC services.

Digital and Analytics

HCL Digital and Analytics uniquely incubated a design and strategy agency over the last 3 years and combined the capabilities with Digital platforms and analytics that it had built over several years. In several wins HCL Digital and Analytics was chosen by enterprises to replace their traditional application services vendors or boutique digital vendors. Key drivers for revenue growth in HCL’s Digital & Analytics practice have been several customers from the consumer services, life sciences, financial services, and utilities sectors. HCL has been rated as a “leader” in all six ‘Application Services’ related quadrants by ISG, including end-to-end ADM and Agile Application development and DevOps.

• A UK-based builder and home retailer has selected HCL to deliver high quality ERP surround solutions and middleware to standardize and enrich core processes of pricing and sales.

• A leading US-based finance and insurance company has engaged HCL to drive a Digital Services Transformation & Application Development Program. HCL is implementing DevOps principles to create continuous integration, delivery and testing pipelines to onboard existing projects and application.

• A leading European banking and financial services company has selected HCL as its strategic partner for rolling out the global KYC platform and for Enterprise Architecture 3.0 program. HCL will implement a real-time KYC shared services platform. This will formulate the processes for creating Guidance, Patterns, Best Practices, Global themes, Global solutions and subjects, Backlog management, Standardized and Established tools at a group level.

• HCL is enabling an end-to-end digital implementation for a US-based health wellness business, which gives it a competitive edge. HCL is working on five digital transformational tracks to create an Integrated Digital platform. HCL is working to transform and redesign multiple applications and IoT platform that will incorporate all of the current and future devices related to the business.

• A leading housing provider in UK has partnered with HCL to revamp its digital strategy, finance, procurement, asset management, HR services, customer Service, contract center, sales and marketing, digital portals, data warehouse, GIS Platform, and Workforce Management.

IoT WoRKSTM

Recognized as market leader in IoT consulting and services by four leading analyst firms—IDC, Everest Group, HfS and Zinnov - IoT WoRKSTM continues to strengthen its leadership position in the fast-growing global IoT services and consulting market. HCL’s unique solutions like asset performance management, remote services platform, active grid management, patient safety platform, and track and trace help businesses IoT-ize their asset bases fast and realize accelerated business benefits.

• HCL has won a contract from one of the largest aircraft OEMs to create an IoT platform for its next generation aircrafts. This IoT platform will help minimize unplanned maintenance, improve cabin experience for passengers through data analytics and help create efficiencies for airlines by optimizing total number to cabin crew members needed during flight operations.

• HCL has entered into a strategic partnership with a global pharmaceuticals leader to help transform its energy management process. As a part of the engagement, HCL will create an interactive IoT platform which will track and compare energy consumption data with occupancy metrics of buildings and optimise systems through data analytics and machine learning.

• HCL has entered into a strategic partnership with a US-based multinational pharmaceutical, medical devices and consumer packaged goods manufacturer to drive product development and operational efficiency through IoT. HCL will implement IoT technologies and data visualization to improve overall quality management of the product driving efficiency.

Cloud Native Services

HCL’s Cloud Services offer a full spectrum of services namely, consulting, migration, implementation, and operations. In FY’18, HCL’s Cloud Services booked several deals across Net New and Existing Customer Projects displaying key cloud native skills. HCL has gathered significant accolades from analyst such as a "visionary" in the Gartner Public cloud Magic Quadrant and a “LEADER” in the first ever Cloud Enablement Services PEAK matrix, by Everest. HCL’s Cloud Native Services have strengthened key relationship with cloud service providers through strategic joint go-to-market plans with Azure, Google, AWS and Pivotal Cloud Foundry thereby offering enhanced vertical and solution specific competencies.

• HCL was chosen by a leading Fortune 500 temporary staffing solutions company for cloud migration. This is a multi-cloud deal that includes Azure PaaS Services and AWS Workload migration.

• HCL has partnered with a Europe-based multinational pharmaceutical company with operations across the globe to migrate its legacy applications to cloud.

• HCL has been selected by a US-based multinational biotechnology company, specializing in neurological medicine and research, for cloud migration. HCL will build elastic infrastructure on public cloud to migrate existing legacy applications which will optimize cost of running operations.

Cyber–Security & GRC

HCL, through its Cybersecurity and GRC Services, inspires business confidence for world’s leading organizations across industry verticals and geographies. Through its holistic Dynamic CyberSecurity Framework, HCL helps enterprises strategize, transform and operationalize their end-to-end cyber security and compliance needs. HCL delivers these services from multiple cybersecurity fusion centers across the globe. Growth in security services was led by US and Europe with large deals coming from verticals such as Financial Services, Energy & Utilities, Lifesciences, and Retail.

• A Leading Europe-based hydropower company has selected HCL as its Global Cybersecurity operations partner across 16 countries. HCL will enable privileged access security controls and provide end-to-end managed security services from its CyberSecurity Fusion centre.

• A UK-based gas distribution company has selected HCL to manage security services from its global Cybersecurity Fusion Centre. HCL will also manage the identity and access for individuals in this regulated business entity.

• A leading container shipping company has selected HCL to implement and manage its risk and compliance process automation. Through the implementation and management of an industry leading platform, the company would benefit from a common foundation for managing policies, controls and risk assessments across the company.

MODE 3: PRODUCTS & PLATFORMS

HCL leverages its expertise in building software IP led businesses over the last forty years to execute its Mode 3 strategy, in an evolving world of high automation and cloud platforms.This strategy is well positioned to enable HCL emerge as a strong leader at the end of this tectonic shift in various software arenas including IT Automation, Orchestration, Hybrid Data, Security and Collaboration. This strategy is well executed by being adaptive and is built through a flexible combination of organic IP, acquisitions and IP partnerships, supported by HCL’s Mode 2 high value services and solutions. These offerings are delivered to the market in various modes through SaaS platforms, cloud market places and on-premise deployments.

Internal IP Creation

• In this quarter, HCL filed 20 patents in various next generation technologies and platforms, inlcuding automation, machine learning, data analytics and simulation, traffic systems, among others.

• In FY18, HCL filed a total of 75 patents in areas of IoT, machine learning, analytics, advanced automobile engineering, wireless devices and machine–to–machine communications, blockchain applications, predictive analytics and aircraft data systems, among others.

HCL DRYiCETM Autonomics & Orchestration leverages the power of A.I to transform entire IT landscapes, business processes and application engineering processes, driving business outcomes and efficiencies.

• A Fortune 50 US-based bank with global presence chose HCL DRYiCETM COPA (Cognitive Orchestrated Process Autonomics) as it started on its Machine Learning and Cognitive journey to improve customer experience.

• HCL entered into an engagement with a US-based Telecommunications major serving in more than 100 countries. The telecommunications company chose DRYiCETM GBP ITSM to transform its service management landscape.

• A Fortune 500 American Chemicals & Ammunition manufacturer based in US chose DRYiCETM GBP ITSM to orchestrate their IT service management.

• An Australia-based Energy & Utilities major, chose DRYiCETM MyXalytics - an intelligent reporting and AI based predictive analytics solution, to improve visibility and drive efficiency using AI-powered analytics.

FY’19 Guidance

• Revenue: FY'19 Revenues are expected to grow between 9.5% to 11.5% in Constant Currency * Revenue Guidance is based on FY’18 (April to March) average exchange rates. The above constant currency guidance translates to 10.5% to 12.5% in USD terms based on March 31, 2018 rates.

• Operating Margin (EBIT): FY’19 expected Operating Margin (EBIT) range is from 19.5% to 20.5%. * The Operating Margin guidance assumes USD-INR currency rate of $1 = ` 66.0 and other currencies at FY’18 average exchange rates.