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HCLTech Misses Guidance, Profit Dips First Time in 16 Years
22 Apr
Summary
- HCLTech reported a constant currency revenue decline of 3.3% in Q4.
- Full-year profit decline is the first for HCLTech in 16 years.
- New financial year revenue growth guidance missed analyst expectations.
HCLTech's stock is under observation after the company announced its March quarter results, revealing a weaker-than-anticipated performance. The IT services giant reported a 3.3% decrease in constant currency revenue for the fourth quarter, with margins at 16.5%, below the expected 17.6%.
The company failed to meet its financial year 2026 revenue growth guidance, achieving only 3.9% growth against a projected 4% to 4.5%. This marks the first instance of a profit decline for HCLTech over a full fiscal year in 16 years.
Furthermore, HCLTech's projections for the upcoming financial year missed market expectations. The company anticipates constant currency revenue growth between 1% and 4%, whereas analysts had predicted a range of 3% to 6%.
Amidst these concerns, HCLTech did announce an increase in its financial year 2027 margin guidance to 17.5%-18.5% from the previous 17%-18%. Revenue from the Advanced AI segment also saw a sequential increase of 6.1% to $155 million.
Management attributed the slowdown to reduced discretionary spending in the telecom sector and the discontinuation of two SAP projects. These impacts, along with clients scaling back spending, are expected to persist into the first quarter of the new financial year.
