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Hello, everyone, and welcome to this earnings call. Nagarro continued to grow into Q1 2023 in constant currency terms, although the pace definitely moderated. In constant currency, our revenues were 2.6% higher than in Q4 2022. However, the weakening of the U.S. dollar against the euro had an impact on the reported revenue numbers. Year-on-year growth was healthy at 22.9% in constant currency terms, of which fully 21.4% was organic. Now while this organic growth is the very basis of Nagarro's growth story, it really helps to expand that base. So Q1 also saw the announcement of the acquisitions of Infocore and MBIS. As of today, the MBIS acquisition is awaiting antitrust clearance from the Turkish authorities, but we hope to be able to close that soon. Nagarro also opened a subsidiary in Taiwan to support clients in the banking and financial services industry. But the big news of today is, of course, the change in guidance. On Friday, we adjusted the guidance for 2023. While our gross margin and adjusted EBITDA margin guidance remained unchanged, we did adjust revenue guidance for 2023 from EUR 1,020 million that we first put out in early January based on the FX rates prevalent then to EUR 940 million based on the FX rates prevalent today. As before, this guidance does not include acquisitions that have been made or will be made in 2023, so it does not include Infocore or MBIS or any other acquisitions that we may do in 2023. So now a part of this change in growth guidance is due to FX. Some of you might have predicted this, as you saw the FX change. It adds up to a couple of percentage points of revenue. But the greater part of this revision is the continuing economic situation and its spinoffs. In particular, the U.S. banking crisis in March. While we see the continuation of the digital transformation programs that we are involved in, we see them all healthy and continuing, the larger economy is having an impact on the expected acceleration in growth in these programs and hence, on our business growth. We find that Nagarro is definitely not alone in this. Many other leading IT services companies have recently lowered their near-term guidance. With the larger demand picture definitely subdued, particularly after the banking crisis and after reviewing our January to April numbers, we decided to adjust our revenue guidance despite Q1 looking very strong in Y-o-Y terms with 20-plus percent growth. The good news in all this is that our clients continue to be very satisfied with Nagarro and remain strong supporters of Nagarro. So we expect this growth to bounce back as soon as they start investing more once again. So this guidance is not triggered by any loss in a client or anything like that. A measure of this relationship with our clients is the Net Promoter Score or NPS. As you know, the NPS is a standardized way to measure client satisfaction and the relationship with clients. And this is the first quarterly call ever where we are reporting our NPS. And our NPS, based on the quarterly customer satisfaction survey for Q1, is 65, which by all accounts is an excellent score. Now most of our clients are leaders in their markets. So we are very proud and grateful for this ringing endorsement from them. We think that most of our clients are also great avenues for us to expand into and grow our revenues from. Meanwhile, putting our existing clients to one side, we also continue to add big name clients to our portfolio, even in this period, creating future streams of growth. So when the macroeconomic environment improves, as it eventually will, we certainly will see our market-leading clients once again forcefully drive the transformation in their industries. And the nature of this transformation is going to be led now more and more by data and AI, around which already a lot of work has happened and is happening for us and with us. But there's even more excitement about what may happen in the future. So with this eventual bounce back in mind and planning for this, we have also added 696 net new additions to the Nagarro family in Q1, most of which are youngsters fresh out of college. Now getting back to the numbers and sharing some more of these. The revenue for Q1 was EUR 229.5 million, up 23.7% from 2021, 22.9% in constant currency. Our gross margin was 26.8%, affected a little by some one-off project costs. Adjusted EBITDA was EUR 31.4 million. Among the different industries that we service, the industry that grew the most in Q1 over the previous year was financial services and insurance, which grew nearly 40%. This is why the fallout of the banking crisis so impacts our continued growth in 2023. The one industry that shrank in Q1 over the previous year was Horizontal Tech, which shrank by 6%. The Rest of the World segment grew fastest at 33% year-on-year, while Central Europe grew slowest at 17% year-on-year. Our top 5 clients continue to add up to just about 15% of our total revenue. Finally, as expected, our cash flow conversion improved as growth moderated, even as we reduced factoring in this quarter by over EUR 8 million. For a second straight quarter, we had a good ratio of free cash flow to EBITDA after adjusting for this lower factoring. Our days of sales outstanding remained stable and we ended the quarter with a cash balance of EUR 114 million. In this slide, on the next slide, you will see our diversification by industry, by client, by region. And as you can see, aside from Horizontal Tech, all our other industries have contributed to the year-on-year growth. Although financial services and insurance, traditionally called BFSI, grew the fastest, client concentration remained low with the top 10 clients adding up to just about 1/4 of total revenue. Among what we call our client regions, the Rest of the World client region continued to grow the fastest. We initially should think of this client region as more of an add-on to our U.S. and Europe focused business. But after some years of rapid growth, it is now a sizable and important part of our growth story. It also provides us a good hedge against the economic trends in the U.S. and in Europe as the local economies continue to grow pretty rapidly in places like India and the Middle East, including UAE and Saudi Arabia. We want to grow with them. And the acquisition of MBIS, for example, is triggered by this focus on the Middle East region as one of the engines of our growth. Here is another view of the segments, the revenues and the margins. I will not spend very much time on this slide. You can see it at your leisure. I will hand over, instead, to Gagan to say a few words on the balance sheet and the cash position.
Thank you, Manas, and hello, everyone. You've just heard about our Q1 as well as our revised guidance for FY '23. To support our operations, our focus is to maintain a balanced net leverage position while ensuring adequate liquidity. In the left-hand chart, for the 3 months ended March 31, 2023, we had financial liabilities of EUR 218.9 million. This amount consists of our syndicated credit facility various working capital facilities, bank loans and liabilities from factoring. Our lease liabilities were EUR 52.1 million. And with a positive cash balance of nearly EUR 114 million, our net leverage stood at EUR 157.4 million, as of March 31, 2023. Given our LTM EBITDA of nearly EUR 151 million, our net leverage ratio was 1.04x, and this compares to a similar net leverage of 1.1x at December 31 last year. The company's liquidity position at the end of Q1 '23 was comfortable with a working capital of EUR 160.9 million. And now on to our cash flows. In the right-hand chart, for the 3-month period ended March 2023, our total cash flow was EUR 7 million, against a negative EUR 27.2 million for the comparable period last year. Let's dig a bit deeper. Our operating cash flow for the 3-month period ended 2023 was EUR 17 million, compared to EUR 2.9 million in the comparable period last year. The increase in operating cash flow in Q1 can largely be ascribed to better collection from trade receivables, mainly collection of old dues from a U.S. public sector customer. And this was offset by a reduction in funds of EUR 8.4 million under the factoring program. Days of sales outstanding calculated based on the quarterly revenue and including both contract assets and trade receivables were at 69 days at the end of the quarter, same as the DSO at the end of Q4 last year. Cash outflow from investing activities in the 3-month period ended 2023 was EUR 7.8 million, mainly due to payment of acquisition obligations of EUR 6.5 million, which includes EUR 5.8 million for acquisition of Infocore and the balance EUR 0.7 million for meeting other payment obligations from older acquisitions. The cash outflow in the comparable period in 2022 was EUR 22 million. We also reported a CapEx of approximately EUR 1.3 million, which is about 0.5% of our revenues. Cash outflow from financing activities for the 3-month period ended 2023 was EUR 2.2 million, as compared to EUR 8.1 million in the comparable period last year. Major items of cash outflow in the current 3-month period were lease payments of EUR 6.1 million and interest payments of EUR 2.2 million, offset by the net proceeds from bank loans of EUR 5.7 million. On May 2, we had announced the terms of our approved program of buyback of shares, which is being carried out from April 24 to October 31 of this year. In this program, up to 350,000 shares, representing 2.54% of our current nominal share capital, would be purchased subject to a EUR 30 million limit. This buyback is being conducted in 3 tranches of EUR 10 billion each, and purchasing began on May 2. So we have now done nearly 2 weeks worth of buyback. Overall, Q1 was a steady quarter with continued constant currency growth and 2 announced acquisitions. With this, I hand over back to Manas. Thank you.
Thank you, Gagan. Moving on to the guidance, which we have already covered in the opening remarks. But just to recap, our change in revenue guidance for 2023 is based on, of course, the evolution in foreign exchange conversions; but two, the broader market sentiment; and three, more particularly the banking crisis; and four, our latest changes in revenue trajectories and revenue visibilities that have resulted from the above factors. So now this is, of course, our guidance. We will continue to do the best we can against this external environment that we find ourselves in. In particular, we see great opportunities around Big Data and AI with our largest clients and are creating initiatives around using this moment of disruption to move up the value chain with our clients. We are excited about the opportunity to reformulate Nagarro with our clients and are putting a lot of time into this effort. The medium and long-term promise of Nagarro is encapsulated by this slide, which we have a tradition of presenting in each earnings call. This promise still holds good. Of late, our Net Promoter Score objectively indicates that our client relationships are strong. And our clients, they see us living up to our market positioning. And they also tell us between the lines that Nagarro's special organizational design continues to create a special differentiated client experience. Growth is, of course, slowed down by Nagarro standards. So we wait for the clouds to clear in the macro environment to get back on the growth trajectory that is more typical for Nagarro. Well, that's the presentation. We will now take questions. In the interest of giving everyone a chance to come forward with questions, please limit the number of questions to 1 at a time. And then once you have posed your question, you are free to rejoin the queue and add follow-on questions. We have the luxury of being able to have you on video, so please turn on the cameras, if you can, or on audio. So that's -- moving into the Q&A session. Maria, can we please have the first question?
Sure, Manas. We're waiting for the first questions to come in. [Operator Instructions] So we'll go with the first question, that is a video question that comes from Adrian Pehl from Stifel.
Adrian, we can see you. So I think you can pose your question.
Can you hear me?
Yes. I can hear you.
Okay. Good. Well, actually, my first question is basically on what you said on the impact of the financial crisis or the banking crisis. So I was just wondering what that, in particular, means? Because -- I mean it sounds like this is obviously not only related to the vertical, financial service and insurance but obviously, it sounds like that had broader implications on how your customers in general behave. And I was wondering if you could provide a little bit more clarity on that. And a question, actually, a little bit linked to that is, do you see, going forward, a somewhat different nature of projects that you are assuming? So -- well, it's clearly all about still the digital transformation on one hand. On the other hand, what we learned from a couple of statements in the industry is that more customers are probably focused on cost-cutting initiatives, less than, let's say, of a transformational topics we have been seeing so far. So any comments on that will be clearly helpful.
Thank you, Adrian. Thanks a lot. So I think -- just to be very clear, I think the banking crisis hasn't had sort of ripple effect outside our banking vertical or financial service and insurance vertical. But it's just that a lot of our growth was coming from this vertical and we were expecting a lot more, and that has -- had to be adjusted. So I think it has more or less contained to that vertical as far as we can see. To your second question or second part of your question, I think that we don't quite see that phenomenon that you just mentioned. We don't -- our projects continue to be of the digital transformation space as much as they were before. We don't see a move to cost-cutting kinds of projects. We just see that the pace at which our clients are moving and pulling their programs ahead, that has slowed a little bit. So I think that in general, we don't have any clients that we know of where the focus has shifted from digital transformation to cost-cutting sort of initiatives with us. At least this is my read. And I do believe that while the nature of projects -- of some projects that we work on will change, I'm hoping and expecting that it will change for the -- for moving up the value chain rather than moving down the value chain. That's at least our best guess at the moment.
Then maybe a question in addition to that. So obviously, the guidance has been revised to some degree. I mean you're not giving any quarterly guidance, I'm well aware of that. But Q1 now came up with more than 20% of growth. So obviously, you're seeing some slowdown in the upcoming quarters. It seems like to me that some are referring to, in particular, a softer second quarter and then some return of a bit more pronounced degrowth in the second half of 2023. Is that what you would, in principle, share? Or do you see, let's say, a slowdown given also your comps are getting tougher throughout the rest of the year on a kind of more linear fashion?
Adrian, it's very difficult to predict the future in this sort of environment. Even a few weeks is like a lifetime in this fast-changing environment. But we do have very tough comps coming up. So our general guess in terms of guidance is the best that we can make. It's difficult for us to -- we don't predict quarter-by-quarter. And yes, I can't get any more specific than that, unfortunately.
Okay. Just asked from the other way around is like because you mentioned in the release actually that you have, obviously, given that we are already mid-May, monitor the performance until the end of April, can you speak about the kind of exit rate that we had in the quarter and also what you saw in April? So were the months rather slow in coming from January, February into March and April? Or how should we think of that?
No, so I don't think it be a slowdown, but we don't see the ramp-up that we were expecting. I mean that's more the story. I mean to sort of be able to grow significantly over last year, where we had a rapid ramp up, we had to ramp up rapidly this year as well. And that ramp-up is slowing down. I think the business, in general, appear stable, and we continue to expect it to keep growing. But the kind of trajectory that we were looking for is not materializing perhaps.
And then lastly from my side before I jump back into the queue is actually, could you talk a little bit about prices? At least on a qualitative standpoint? I mean, obviously, given that we are seeing some slowing situation, first of all, is it correct to assume that pushing on prices is now a little bit more difficult in that sense? And I saw actually that doing the math on your average or linearized average, professional engineering head count, the revenue per professional was down 2.3%. So is that already kind of a reflection, actually pushing or downloading higher price to your clients is getting a bit tougher?
No, I don't think that has materialized like we expected it to materialize. We actually find reasonable support for prices across our clients. And I know this sounds a bit like a contradiction, but I think everyone's aware of inflation, for example, and we see support for our prices. I think that in general, we operate in terms of utilizations and our bench strength in a certain range. And we may be on the higher end of the range in terms of the bench strength or excess capacity that we have to sort of ride future growth. But we are hopeful that this will turn around, and we are sort of betting on that. So I think that it's not a price issue as far as we can see at the moment.
Let's move on to Andreas Wolf from Warburg Research.
Hi, everyone. Can you hear me?
Yes.
Okay. Great. I had some technical issues here, but I made it. Okay, let's start with the first one. So basically, my first question is regarding receivables that were overdue at the end of last year. Maybe Manas or Gagan, you could comment on those, whether they've been paid by now. Obviously, those were related, that was my understanding, to the large public sector client. And sorry, I have a second question, which I'll just ask since I'm already here. So the second is also related to volatility in the business development. I'm interested to what extent Nagarro is providing staff augmentation business to its clients, which, along with the hope on the banking sector, would help me to understand the volatility in the growth rate?
That's -- these are good questions. So Andreas, first, overdue receivables for the public sector client have mostly come in. So we are not -- don't have exact numbers in the report. But broadly, I can say they mostly come in. So that challenges result. The second question, do we provide staff augmentation services. We have always had this philosophy that a small fraction -- a few percentage points of our revenue from staff augmentation in places where it helps us to build longer, deeper relationships with new clients is acceptable. So we do some of that, but not very much of that, right? So I think that -- we do have some of that impact perhaps from the slowdown. But the larger part, I think, is also on the -- as I said before, that the digital transformation projects of many banks are now a large part of our revenue and continue to be a large part of our growth. And many of these are referred to us by consulting companies and the pace at which those are ramping up is also slowing down. So it's -- there may be some small staff aug components to that, but that's not maybe the only driver of this division of guidance for us.
All right. Let's move on to the next question, which comes from [ Joaquim Heredia Nassar ].
Hello, Manas, can you hear me?
Yes, we can hear you.
Okay. I would like to ask you something regarding the net cash outflow from factoring of EUR 8.4 million. Can you please confirm to me whether this amount is related to the payment of interest? Or if you have -- have you used any factoring this quarter?
So as far as I understand, and, Gagan, maybe can jump in, factoring is an ongoing activity, but we are -- we have ramped it down, the total amount that we have factored. We have ramped it down by EUR 8.4 million. And so it's not just the payment of interest, it's actually a reduction of factoring overall. But Gagan, maybe you can add a few words?
Yes. Yes, you covered it. But just to add, in the report, on Page 22, we've given a table and that should help clarify a bit more on the exact amounts that were done for this quarter compared to the December quarter last year.
And we're aware that investors are not very happy with factoring. So we are trying to not increase it and actually bring it down gradually perhaps.
Okay. That's a good idea, maybe, because of the interest and maybe related to the reports from journalists.
Yes, yes. And the interest rates as well, that too.
All right. Thanks a lot. We have no further questions at this stage and we are good to ramp up the call.
All right. Great. Thanks, everyone, for this call. We will be at the Berenberg Pan-European Discovery Conference in Portugal on June 15 and 16. So maybe we'll see some of you then. And of course, we have the AGM on the 21st of June. Thank you for your time. Thanks for joining, and have a great rest of your day. Thanks. Bye-bye.
Thank you, everyone.