AI-Led Success for Mphasis in Q4 FY25: Here’s What You Need to Know

Rahul Chaudhary

4 weeks ago

Mphasis Q4 FY25 Results: AI-Focused Growth and Strong Deal Wins

Who Spoke at the Earnings Call?

Nitin Rakesh – CEO
Aravind Viswanathan – CFO
Vinay Kalingara – Head of Investor Relations

Mphasis Strategy: AI at the Center

Mphasis is focusing heavily on artificial intelligence (AI) to drive change. They call this approach “Savings-Led Transformation™”. It’s all about using AI to make systems smarter, faster, and more efficient.

AI is now a basic requirement for winning deals. It’s part of both new and ongoing projects. In Q4 FY25, 65% of Mphasis’ deal pipeline was AI-driven. A year ago, that number was only 25%. Out of all new deals this quarter, 59% involved AI.

Mphasis’ Four-Step AI Approach:

Build a solid data foundation
Strengthen identity and access controls
Use AI technology for real solutions
Create a flexible, safe AI roadmap

They’re using their AI platforms, NeoZeta™ and NeoCrux™, to modernize systems and give clients useful insights. Mphasis was also recognized for their work in advanced AI reasoning and even received a U.S. patent for quantum computing.

Performance Highlights

Big Deals and a Strong Pipeline

Mphasis secured $390 million in total contract value (TCV) in Q4 FY25—the best in nearly two years. They won 2 large deals this quarter and 13 in the full year. Since 2018, they’ve closed 75 large deals.

Growth in Deal Pipeline (Year-over-Year):

Overall pipeline: up 86%
Banking and financial services (BFS): up 70%
Non-BFS sectors: up 99%
Large deals pipeline: up 154%

Main growth driver: IT value stream work, which includes agile IT operations and tech upgrades.

Examples of New Wins:

A major U.S. bank: modernized its data center
Logistics company: upgraded with data-powered systems
Healthcare provider: used Mphasis Javelina® and experience platform
Wealth services firm: improved regulatory systems and digital platforms

Revenue and Business Segments

In Q4 FY25, Mphasis made $430 million in revenue, which was a 2.9% increase from last quarter and 5.4% higher than a year ago, when measured in constant currency (CC).

Regional Revenue:

U.S. Direct: +3.7% QoQ, +7.1% YoY
Europe, Middle East & Africa (EMEA): +0.9% QoQ
Rest of World (RoW): +8.7% QoQ, +24.4% YoY (CC)

Industry-Wise Growth (QoQ, CC):

BFS: +5.6%
Tech, Media, Telecom (TMT): +9.6%
Insurance: +0.3%
Logistics & Transportation: -7.7%
Other sectors: -3.4%

Client Growth and Revenue Pyramid

Mphasis added:

1 client spending over $75 million
1 client in the $20 million+ group
3 clients in the $5 million+ range

Some new clients already spend over $60 million annually.

Top 10 clients grew by 5.8% over last quarter. Clients ranked 11 to 30 grew 5.7% in the same period.

Financials: Margins and Profits

Mphasis kept its operating (EBIT) margin steady at 15.3%, in line with their guidance. Profits rose 3.9% QoQ and 11.7% YoY. The company posted its highest-ever EPS at INR 23.5, a 12.9% increase from last year.

Key Financial Figures:

Operating cash flow: $52 million (100% of net income)
Days Sales Outstanding (DSO): 75 days (3 days higher than last quarter)
FY25 Dividend: INR 57 per share

FY26 Margin Outlook

Mphasis expects to keep margins between 14.75% and 15.75% in FY26. They will invest in big deals and AI platforms rather than pushing for short-term margin growth.

Market Trends and Customer Behavior

Mphasis is watching global risks like tariffs and trade issues. These factors are causing clients in some industries to delay decisions. However, banking, insurance, and healthcare are less affected.

Even with some slowdowns, Mphasis expects steady growth in Q1 and Q2 of FY26, unless the global situation worsens.

Business Model and Workforce

Mphasis uses a flexible staffing model:

Short-term forecasting (90-day windows)
No large idle workforce
Smart use of subcontractors

They’ve increased offshore hiring due to new projects. Utilization isn’t a target—it’s just a result of project needs.

They are also shifting away from the traditional model of billing based on hours. Instead, they now focus on delivering complete solutions using tech.

AI and Quantum Projects

Clients want AI not just for new ideas but for real cost savings. Mphasis helps improve:

IT systems
Claims processing
Underwriting
Business operations

They focus on proper data handling, AI infrastructure, and ethics.

Quantum Efforts

Mphasis holds a U.S. patent in quantum machine learning and was recognized for advanced AI reasoning (DABStep challenge).

Outlook for FY26

Management expects to grow faster than the industry average in FY26. Their confidence comes from:

Strong deal wins
A growing pipeline
New deal execution teams

They aim to keep growth steady throughout the year.

The goal is not just to grow fast, but to grow consistently—even in a tough economic environment.

What to Watch Out For

Mphasis sees a few risks:

Global uncertainties (tariffs, recession, trade disruptions)
Industries like logistics and manufacturing may feel these effects more
Some deals might take longer to start, depending on the client

They’re keeping margin flexibility so they can still invest in large or AI-based deals.

Analyst Questions: Key Takeaways

Logistics drop: Not from one client—it’s industry-wide due to economic concerns
TMT growth: Came from large deal ramp-ups
Mortgage segment: Gains from using AI to cut costs, but no demand increase yet
Win rates: Holding steady, better in AI-related projects
TCV outlook: Expect around $350 million+ per quarter, if macro conditions remain stable

Conclusion: Mphasis Focused on AI, Growth, and Execution

Mphasis had its best quarter in three years. They grew steadily, signed big deals, and expanded their pipeline.

The focus is clear—use AI and technology to help clients modernize and save money. Their platforms, NeoZeta™ and NeoCrux™, support this approach.

They’re not chasing short-term profits. Instead, they’re investing for the long run.

Highlights Recap:

65% of deals in Q4 FY25 were AI-led
Deal pipeline up 154% YoY
Platforms like NeoZeta™ driving results
FY26 margin guidance: 14.75%–15.75%
Final dividend for FY25: INR 57 per share

Mphasis is using a clear, tech-first plan to grow, even during tough market conditions. Their shift from people-based billing to tech-based solutions is helping them stay strong and ready for the future.