Birlasoft Limited (NSE:BSOFT) Q4 FY23 Earnings Concall dated May. 08, 2023.
Corporate Participants:
Abhinandan Singh — Head, Investor Relations
Angan Guha — Managing Director and Chief Executive Officer
Kamini Shah — Chief Financial Officer
Analysts:
Manik Taneja — Axis Capital — Analyst
Dipesh Mehta — Emkay Global — Analyst
Sandeep Shah — Equirus Securities Private Limited — Analyst
Shradha Agrawal — Asian Markets Securities — Analyst
Mohit Jain — Anand Rathi — Analyst
Vibhor Singhal — Nuvama Equities — Analyst
Abhishek Shindadkar — InCred Capital — Analyst
Anmol Garg — DAM Capital — Analyst
Girish Pai — Nirmal Bang Equities — Analyst
Sugandhi Sud — InCred Asset Management — Analyst
Karan Uppal — PhillipCapital India — Analyst
Devang Bhatt — IDBI Capital — Analyst
Jyoti Singh — Arihant Capital Markets — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Birlasoft’s Q4 FY ’23 Earnings Conference Call. [Operator Instructions] There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]
I now hand the conference over to Mr. Abhinandan Singh, Head, Investor Relations, Birlasoft Limited. Thank you, and over to you, sir.
Abhinandan Singh — Head, Investor Relations
Thank you, and welcome folks. By now, you would have received our — or seen our results, those are also available on our website, www.birlasoft.com. Joining me on this call today are our CEO and MD, Mr. Angan Guha, and our CFO, Ms. Kamini Shah, who, as you are aware, joined us recently. We will begin the call today with opening remarks from Angan and then Kamini.
Before I hand over the floor to Angan, though, a quick reminder that anything that we say on this call on the Company’s outlook for the future would be a forward-looking statement, and therefore, that must be heard or read in conjunction with the disclaimer that appears in our Q4 FY ’23 investor update, which has already been sent to you, is also uploaded on our website as well as filed with the stock exchanges.
With that, let me hand over the floor now to Mr. Angan Guha, our CEO and MD. Over to you, Angan.
Angan Guha — Managing Director and Chief Executive Officer
Thank you. Thank you, Abhi. Good evening and good morning, wherever you are, and thank you for joining us today, as we share some perspectives for our Q4 and financial FY ’23 performance. As all of you know, this marks the full quarter of me taking over as the CEO and MD of Birlasoft. I’m sure you know that we — I joined the Company on 1st December, 2022. I’m also pleased to have our new CFO, Kamini Shah, present in the call today. She is a highly accomplished finance leader with a proven track record of driving financial transformation profitability at scale. I believe her financial and business acumen will add significant value to our business. I will ask her to share some perspectives on our financials after my initial remarks.
But before I delve into the results, as I had mentioned in the last call, allow me to share some details on our growth strategy and some of the actions that we have taken to sharpen our go-to-market focus and build a growth mindset. As all of you know and I’ve spoken to you in the last earnings call, we have embarked into a big cultural as well as an organization transformation program. So broadly speaking, we are changing our organization on two dimensions, one, to become sharply focused on select verticals and service line, and second, to culturally become more nimble, execution oriented — or as an execution oriented organization.
Towards that end, firstly, we are revamping our organization for better synergies, higher efficiencies, and deeper customer engagement. The organization has already been restructured with operations now aligned by verticals. More specifically, the North American geo, which contributes to almost 85% of our global revenues will comprise of verticals, manufacturing, BFSI, energy and utilities, and life sciences. These verticals where we have accumulated securities[Phonetic] over the years and that can act as clear differentiator for us.
Each of these verticals will have a P&L leader who will be responsible for the P&L and will report to the CEO for North America. For Europe and the rest of the world, we will have separate leaders who’s mandate will be to expand the footprint in those geographies. Additionally, we have a Chief Growth Officer, whose job will be to drive and create marketable solutions, strategic partnership, improve our industry as well as advisory outreach and manage our marketing function.
Coming to the India organization, we’ve created a Chief Operating Officer organization, like we call the COO, and the COO will be responsible for all delivery, building our capabilities through our service lines, running our CIO, Infosec, and the CTO function. As a result, with this move, we will have a unified delivery organization, which reports into the Chief Operating Officer, as well as very, very closely aligned to the geography organization. While from an industry vertical perspective, I’ve already talked about our focus areas. In terms of service lines, we will again focus on four strategic service lines, digital and cloud, data analytics, infrastructure, and ERP. We are getting all our ERP practices under one leader, so that we have one common ERP practice.
Second big transformation that we are driving within our organization is the cultural transformation, which will make our organization more responsive, client-focused, and of course, these cultural changes, as you know, does not happen overnight. So you folks have to give us some time for the cultural transformation to take effect, but we are well on our journey. The cultural transformation initiatives will be predicated on six big tenets. One, high say-do ratio, have a growth-oriented mindset, high customer centricity, quick decision-making, and employee centricity. But overall, the number one initiative on the cultural transformation tenet will the organization first. The goal here is to reorient and optimize for greater accountability and swifter actions.
With this, now let me move quickly to our quarterly and annual performance. I’m happy to report that we had a strong operating quarter in Q4, both on revenue and EBITDA performance. On revenue for the quarter, our revenues stood at $149.1 million, which was up 0.5% quarter-on-quarter in dollar terms. But if you really take Invacare out of the picture, the growth actually was 3.3% quarter-on-quarter. This reflects strong underlying strength in our business, and we hope to continue this performance. Our EBITDA margins for the quarter under review also expanded 20 basis points quarter-on-quarter.
Looking at our full year performance. Our revenue grew at 16.1% in rupee terms and 9.1% in constant currency terms. Again, ex of Invacare in dollar terms from a constant currency perspective, we were able to manage a double-digit growth of 11.5%. Our EBITDA margins for the year stood at 14% before the one-time provision that we took for Invacare. On the deal signing standpoint, again, we had a very strong deal signing quarter. Our TCV signings for the quarter stood at $286 million. As I’m sure you remember, in 3Q, we delivered $231 million for the TCV, and in this quarter, we’ve even bettered that with $286 million worth of TCV signings. So all-in all, I think it’s been a very strong quarter and a strong end to the financial year.
Looking forward, I just wanted to make one statement on Invacare. We have amicably entered into a settlement with Invacare. This is a significantly positive step towards us, because as you know, this will now allow us to focus our full attention on executing our growth plan without getting worried about the Invacare situation that was upon us in the last quarter. Over the last few months since I spoke to you, the macroeconomic environment is relatively subdued and there are, of course, challenges in some of the sectors that you I’m sure all know about.
We will expect a slower client decision as we go into the next couple of months, as the business priority shift and the landscape also shift. Conversations with clients indicate that their organization will continue to spend on IT, but the spending would be to drive more improvements and operational efficiency and cost efficiency rather than transformation work. Consequently, the outlook for the coming year is one of growth, although the gap that is created due to the absence of contribution from Invacare means that, on reported terms and an overall, top line growth may look a little muted.
Our suggestion is measure of some quarter-on-quarter performance going forward, because year-on year performance will be muted, thanks to the fact that Invacare will not show up in FY ’24. As I’ve said in the past, I firmly believe that sharper focus, consistent and robust execution, as well as a very incentivized and vigorous team, and a client-centric organization with high say-do ratio can take us to our next phase of growth journey.
At this point, I will ask, Kamini, our Chief Financial Officer, to share some perspectives on the quarter and the year under review. Kamini?
Kamini Shah — Chief Financial Officer
Thank you, Angan. Good day to all of you. Thank you for joining us and I hope you’re all doing well. I’m very happy to be part of the Birlasoft team. I’m looking forward to working with Angan and the rest of the leadership team to support the execution of our strategy, while keeping a tight control on key performance and risk management metrics.
Let me first start with the quarter four performance. As Angan had called out, we have reported revenues of $149.1 million for Q4 ’23. While this represents a growth of 0.5% quarter-on-quarter, ex Invacare, the growth translates to about 3.3% on dollar terms and 3.1% on constant currency terms. I’m happy to say that we have delivered 13.6% EBITDA, which is an expansion of 20 basis points quarter-on-quarter. This is a comparison against our quarter three ’23 EBITDA, before the Invacare one-time provision. There has been a lot of focus on operational metrics, improving our utilization, our pyramid, and lower attrition that has contributed to it despite absorbing the ongoing costs of providing services to Invacare.
PAT for the quarter was at $13.6 million, while our tax rate for the quarter appears to be lower. This has been due to partial reversal of tax provisions in the previous quarter. However, on a full year basis, our ETR will remain comparable to the preceding financial year of about 25% and that is the expected normalized tax rate that we expect to operate it.
Now, let me move on to the full year numbers. The revenue for the year increased to 7.2% in dollar terms, and ex Invacare, we would have been at about 9.6% in dollar terms. Our top 10 accounts have grown at 17% and our top 20 accounts have grown at 11.6% year-on year. We have reported an EBITDA of $84 million, implying an EBITDA margin of 14% for the year. This, of course, excludes the one-time provision on account of Invacare. The PAT for the year is at $41.6. Other income has been lower due to lower interest income and forex loss on account of restatement of assets. You are aware that we had concluded our share buyback program in first half ’23 which has resulted in lower investable cash in turn to lower interest income during the year.
Now let me briefly touch upon the key balance sheet items. Our cash and bank balances at the end of fourth quarter stood at $137.3 million, this is 13% quarter-on-quarter from the $121.1 million that we had closed. This reflects consistently good cash generation as evidence as our DSO. I’m happy to say that our DSO is now closed at 53 days, which you agree would probably be the best-in-class. Our operating cash flow for the quarter, Q4 was at $19.2, this is at about 95% of our quarterly EBITDA and about 141% of our PAT. And from a full year perspective, our cash generation has been at $84 million, which has been at about 100% of our adjusted EBITDA.
In line with our track record of prudent capital allocation and rewarding shareholders, the Board of Directors have proposed a final dividend of INR2 per share subject to shareholders’ approval. This proposed dividend along with the interim dividend paid out and the buyback that was concluded during FY ’23 will together translate to a total payout amounting to 126% of adjusted PAT for the one-time provision.
To conclude, we have ended the year with a robust balance sheet, we are generating strong cash flow, and we have the ability to make investments necessary to drive growth in our business going forward. Thank you very much.
Back to you, Abhi.
Abhinandan Singh — Head, Investor Relations
Thank you, Angan, and thank you, Kamini. Moderator, can you please initiate the Q&A session now.
Questions and Answers:
Operator
Yes, sir. Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Manik Taneja from Axis Capital. Please go ahead.
Manik Taneja — Axis Capital — Analyst
Hey, congratulations for the good performance. I actually had a question related to our segmental performance, and we see that our segmental profitability across verticals with an exception of licenses is we had a one-time costs incurred quarter, but our margins have improved sequentially across all the other segments. So just wanted to understand what is driving that? And if you could talk about our aspirational margins from the medium-term standpoint.
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so if you look at our segmental performance, all our — the two big segments, right — and I am assuming, you are talking about the vertical performance, right? So our BFSI performance has been very strong, as you have seen, it’s grown 17% year-on-year. Our manufacturing performance also has been strong. And if you look at our E&U performance, that has been a little muted. Obviously, because of Invacare, the operating performance for life sciences looks far more muted, right? However, if you look at from our perspective, we’ve been able to reduce attrition over the last quarter and that has helped improve our margins in a significant way.
Manik Taneja — Axis Capital — Analyst
Okay. So are there any other factors that’s driving this sequential improvement in segmental margin in all these verticals?
Angan Guha — Managing Director and Chief Executive Officer
So there are two factors, one is, of course, the attrition improvement that we spoke about. But apart from that, I think the team has done a very good job in terms of driving operational efficiencies. As you also may recall, last quarter, I talked about the fact that we’ve driven a lot of synergies, thanks to the fact that we were able to consolidate our delivery structure under one organization. So it’s really a combination of all of these factors that has helped us improve the margins, as we have stated this quarter.
Manik Taneja — Axis Capital — Analyst
Sure, thank you. And any indication on medium-term margin outlook.
Angan Guha — Managing Director and Chief Executive Officer
So, look, it’s hard for us to give our outlook going forward, because the situation in the market is very, very volatile. But suffice to say that our endeavor, like I’ve said even last quarter, will be to maintain the margins at that 15% level, because you must also remember, we are investing in the business going forward, right? So keeping in line with all the investments that we will do over the next six to seven months, all the operational improvements that we will drive, I think we are confident to keep it within the range of that 15% to 16%.
Manik Taneja — Axis Capital — Analyst
And last one before I get back in the queue. You talked about the organizational restructuring of the new org — for the organization. So where are we in this journey in terms of all the necessary changes?
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so we are already down this journey, as you know. I mean, we’ve been at it for the past four months. So the organization restructuring is now complete. We have the critical roles already filled up. of course, certain roles we still have to fill and we are in the position of — we are in a position of filling them really, really quickly. But I would say, 90% of the work is done, probably 10% of the work is left and we are on the job. If I were to take a call, I would say that it’ll probably take me three more months, but by the time June or July comes in, I think we will be done with all the hires, as well as the new operating model will be in, folks.
Manik Taneja — Axis Capital — Analyst
Thank you, and all the best for the future.
Angan Guha — Managing Director and Chief Executive Officer
Thanks.
Operator
Thank you. The next question is from the line of Dipesh Mehta from Emkay Global. Please go ahead.
Dipesh Mehta — Emkay Global — Analyst
Thanks for the opportunity. Just one clarification. Whether this Q4 performance include Invacare-related cost [Indecipherable]? What will be the normalized EBITDA margin if one — because now Invacare-related costs may not recur post the settlement period, it is somewhere in May. So if you can provide that clarification. Second question is a broader trend, what we are witnessing in four major verticals. Where do you think strength remains fairly high and you expect growth momentum to continue despite all the macro uncertainty? And areas where you think some softness will be visible because this quarter if one look at is, it is fairly broad-based except life science. So if you can provide some perspective on vertical-related growth trajectory. And last is about the enterprise solution. After a few quarters of softness, this quarter is showing some kind of positive growth trajectory. What’s your expectation on that ERP segment?
Angan Guha — Managing Director and Chief Executive Officer
Yeah, thank you, Dipesh. So I’ll take all the three questions. The first question on Invacare, if we look Invacare, first of all, the margin that we have delivered has Invacare cost built-in in Q4. As you have rightly mentioned, the Invacare cost will not be there starting — hopefully, starting 1st of June, but we can’t really give you a specific in terms of what will be the percentage cost that will get released, because of the Invacare program getting closed out. We don’t give customer-specific commentary. So it will be hard for me to give a customer-specific commentary. But suffice to say that 13.6% EBITDA margin that we delivered had cost of Invacare built in.
On the growth part, as you have seen, our financial services business is very strong. I feel it will continue to grow over the next couple of quarters. We see a lot of demand coming our way on the financial services side. But you must also realize our financial services business is very, very small. So it’s not really comparable to the other players in the market who have got large financial services businesses. So that for us will continue to grow. We see green shoots coming up in manufacturing. I strongly believe that it will take us a couple of more quarters, but manufacturing will come back to growth.
E&U will be a little soft for us going forward. We will have to closely watch how that sector goes. And the last sector that we are focused on life sciences. We are optimistic on life sciences, but we’ll have to wait and watch the sector very, very closely because there is lot of consolidation that is happening in that sector, and that sector, in general, we are seeing some weak trends coming out. So we are keeping a close watch on it, but if I were to be a betting person, then the two businesses that we are betting heavily on will be manufacturing and financial services.
The last question on ERP, yes, you are right, we are seeing a reversal of trend on the ERP business. Like I said that we have decided to consolidate all our ERP offerings under one leader. The new leader is onboard. In fact, the new leader just came onboard a week ago. So hopefully, once the new leader settles down, we will see how that business plans out for us. But I think that business has bottomed-out for us. From hereon, we will only see growth there.
Dipesh Mehta — Emkay Global — Analyst
Just one question. If I adjust your Invacare revenue, it definitely has to be $4 million kind of contribution. And if $1 million cost would be proportionate to the general business trend opening, then your margin expansion seems to be very strong once the Invacare-related normalization start. So then your margin trajectory will reflect it or you see any headwind entering into, let’s say, Q2 onwards? Thank you.
Angan Guha — Managing Director and Chief Executive Officer
Yeah. So Dipesh, it is very hard for me to say what headwinds will come in. I don’t know what I don’t know. But I can only tell you and I can’t give specifics again on Invacare from a cost perspective, but I would like to point out the conversation that we were just having a little while ago that we will continue to invest in the business. We believe in investing in our front-end, in our domain capability, in our service line capability, and we will utilize this opportunity to continue to invest for the future.
Dipesh Mehta — Emkay Global — Analyst
Understand. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Sandeep Shah from Equirus Securities Private Limited. Please go ahead.
Sandeep Shah — Equirus Securities Private Limited — Analyst
Yeah, thanks. Thanks for the opportunity, and congrats on a good execution despite so many challenges. The first question, Angan, is, you, in your opening remarks, said that the growth momentum of 3.1% constant currency if you are looking — hope to continue on a going forward basis. So do you expect this trajectory to continue over all four quarters of FY ‘2024 or how do you see and how do you interpret this comment as a whole, that’s the first question. Second, the settlement amount of $2 million, which we have with Invacare, will it be shown as a revenue in the second quarter or will it be shown as a cash flow [Indecipherable] debtors, which has been outstanding in the book. So I believe debtors have been written-off totally, so this would be shown as a revenue as a whole. And thirdly, the EBITDA margin, the 15% to 16% which you highlighted, that you are actually indicating, excluding the Invacare costs as a whole? And what would be the wage hikes, and which your quarter rate would be affected. Thank you.
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so first, let me address the first question, the growth first. Now, what I — when I was saying the growth momentum will continue, I didn’t mean the 3% growth will continue, right? The 3%, quite frankly, has been a great execution by us this quarter, right? This quarter was exceptional in many ways, because the deal wins that we were able to get in 3Q, we were able to convert that into revenue in 4Q. Quite frankly, I don’t expect us to continue to grow at 3% every quarter going forward, that will be a very big stretch. And quite — and again, we don’t know how the headwind comes in and when will the headwind come in, because the things are getting very softer. And as far as the market is concerned, it is very volatile. So it’ll be very hard for us to come to any conclusion that whether a 3%, 2%, 1% growth, what will be the real growth for us. My only comment to that was that our growth momentum we hope to continue, as we see today. Now, tomorrow if the markets change, if the headwinds are much larger than what we think then everything is off the table. But today, as we stand today and we see the situation, I’m hoping that the growth momentum will continue. I can’t comment on the percentage.
Now, second, as far as the Invacare is concerned. So you’re right, I commented that we will want to keep our margins at 15% to 16%, and again, I can’t really comment on how much amount of cost will go away from Invacare, because remember, Invacare, we only get out on the 1st of June. So two months of costs we still carry, that’s number one. And number two, like I have said earlier, we will continue to invest in our business. We will not cut-back on our investment. For the medium-term, we want to keep our EBITDA margins in that 15% to 16% range, while we build our team for the — and make our Company future growth ready.
I forgot the last question. Can you repeat the last question, again, please?
Sandeep Shah — Equirus Securities Private Limited — Analyst
Yeah, the question was on wage hike and the settlement amount of $2 million, how [Speech Overlap] revenue in the first quarter.
Angan Guha — Managing Director and Chief Executive Officer
Correct. So the wage hike, we will do a wage hike this year, as we have always done, and we will follow a policy as we have followed the policy last year. So the wage hike will come in. So you are actually right. Apart from investments, apart from the fact that we will continue to build our capability around domain, even the wage hike will take away some of the margin expansion that we are doing operationally, which is why I said, I can comfortably say that we will be within the 15% to 16% range. Now, as far as Invacare is concerned, the settlement is very clear. The settlement is $2 million, which we will get. But we will only recognize the $2 million worth of revenue when we get paid for it, right? So we are waiting for the tenure to get over. And once the money comes in, then we will decide how we take that as a part of our balance sheet. But Kamini will throw some light on it.
Kamini Shah — Chief Financial Officer
Yeah. So Sandeep, thank you for that question, right? With regard to the recognition of the $2 million of Invacare settlement, I think this is something that we will discuss with our auditors and decide on the right and appropriate accounting treatment, right? So I think at this point of time, it will be difficult for us to confirm as to exactly how that will be treated.
Sandeep Shah — Equirus Securities Private Limited — Analyst
Okay, thanks, and congratulations Kamini.
Kamini Shah — Chief Financial Officer
Thank you very much, Sandeep.
Operator
Thank you. The next question is from the line of Shradha from Asian Market Securities. Please go ahead.
Shradha Agrawal — Asian Markets Securities — Analyst
Yeah, hi, and congratulations on a good quarter. Angan, on the clients, that we’ve seen again another quarter of decline in our active client count, and we thought probably that the clientele rationalization is almost over. So are we still looking at cutting down on some clients who are [Indecipherable] revenue or how should we look at the active client count going ahead?
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so Shradha, as we had indicated in the last call as well that we want to work with fewer number of clients, so that we can build strong deep relationships with them. So as a part of the tele rationalization, you will probably see a couple of more quarters of the tele coming down because, at our size and as we push forward, working with more than 250 or 300 clients becomes extremely difficult. So you will see that rationalization going forward as well, Shradha.
Shradha Agrawal — Asian Markets Securities — Analyst
Okay, great. And another thing on cloud-based services, this segment has otherwise seen strong [Indecipherable] for quite many quarters, but this time around, we saw a decline of almost 5%. So is it related to the Invacare deal or is it related to some other client project ramp-down or how should we read this decline in cloud service?
Angan Guha — Managing Director and Chief Executive Officer
Yeah, that is because of the Invacare, you’re correct.
Shradha Agrawal — Asian Markets Securities — Analyst
Okay. And sir, just last bit on the hiring front. So you’ve indicated that you have created a new office of Chief Operating Officer and Chief Growth Officers. Can you give some indication on which companies have these people been hired from and what is the kind of hiring and sales team that we’ve done because we’ve seen a smart increase in the sales count as well. So any incremental color on the kind of people you hired would be helpful.
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so Shradha, I can only say that we are hiring the best talent in the industry. We have been able to attract very good talent in our Company. I can’t, obviously, give specifics in terms of which company they have come in from because we’ve hired upwards of about 25 leaders externally. But equally, I must also tell you that we’ve promoted 25 to 30 leaders internally. So it’s not only about external hiring. It is also about internal promoting because we want to keep the balance right. But I can only say that we are hiring from the best in the industry and we are able to attract very, very good talent.
Shradha Agrawal — Asian Markets Securities — Analyst
Great. Well, for sure. Thanks. That’s it from my end and all the best. Thank you.
Angan Guha — Managing Director and Chief Executive Officer
Thank you.
Operator
Thank you. We have the next question from the line of Mohit Jain from Anand Rathi. Please go ahead.
Mohit Jain — Anand Rathi — Analyst
Yes. Sir, first is on ’24 outlook. Now, [Indecipherable] seems to be around macro. So can you give an — should we assume that your growth will broadly be in line with the industry adjusted for Invacare?
Angan Guha — Managing Director and Chief Executive Officer
So Mohit, again, very hard to say, and I would love to be at the industry level adjusted for Invacare, that is, obviously, our goal internally. But my only commentary, like I had said earlier, Mohit, measure some quarter-on-quarter performance because year-on year very difficult when $14 to $16 million revenue has gone away on a base of 600-odd-million-dollars, right? So year-on year performance [Speech Overlap]
Mohit Jain — Anand Rathi — Analyst
[Speech Overlap] expectation for Invacare, so when we look at the adjusted numbers, then it should more or less — or do you think more [Indecipherable] may come because of higher exposure to maybe transformation service line or anything else that comes to your mind.
Angan Guha — Managing Director and Chief Executive Officer
No, so from where we stand today, Mohit — from where we stand today, we would like to drive ourselves for quarter-on-quarter revenue growth. That’s all I can say. Now, whether, I will be at industry level adjusted for Invacare, etc., only time will tell. We don’t give guidance beyond — we don’t give guidance for the year or for the quarter. But I can only tell you that we have put a very strong execution engine behind us and we will continue to execute well, Mohit.
Mohit Jain — Anand Rathi — Analyst
Great. And how much more Invacare for FY ’23 as a whole year?
Angan Guha — Managing Director and Chief Executive Officer
Kamini?
Kamini Shah — Chief Financial Officer
It was about $15 million.
Angan Guha — Managing Director and Chief Executive Officer
Yeah, $14 million — $14 million is what was on the books. And of course, the last quarter, we did recognized $4 million. So technically, it was $18 million, out of which $14 million we recognized, $4 million we didn’t.
Mohit Jain — Anand Rathi — Analyst
$14 million for nine months?
Angan Guha — Managing Director and Chief Executive Officer
For nine months. That’s correct.
Mohit Jain — Anand Rathi — Analyst
Perfect, sir. And last question on healthcare. Now, you — your commentary was relatively soft for healthcare and Invacare has gone in this quarter. So going forward on a sequential basis, should we expect some decline to sort of continue in healthcare or do you think healthcare, now that it is ex Invacare, should be back to growth?
Angan Guha — Managing Director and Chief Executive Officer
So hard for me to say again. And the only reason I say this, Mohit, is because the customers that we — the clients that we serve are also going through a enormously tough time, right? There is lot of consolidation, there is lot of layoffs by large pharma, healthcare companies globally, as I’m sure you know. So it is hard for us to say because there is an issue when it comes to discretionary spend. So our endeavor will be to continue to serve our customers, the customers that we have, and continue to open new logos, so that we can be growing the business going forward. Immediately, for the next couple of quarters, you will see a little bit of a softness. But like I keep saying, we are continuing to invest in all the four verticals that we have identified.
Mohit Jain — Anand Rathi — Analyst
So the whole TCV thing that we are reporting for last two quarters, I’m assuming it is — most of it is BFSI manufacturing, as you said in the opening remark. Is that correct?
Angan Guha — Managing Director and Chief Executive Officer
N, not really. It is broad-based actually, it is not. But if you look at the $231 million that we did in 3Q and $286 million that we did in 4Q, actually the TCV is broad-based. The issue is not so much about TCV, Mohit. We are winning deals. We are winning a lot of deals. We have a very strong pipeline. The issue is about project closures and the run-off that one may have. Now, I can’t predict the runoff. We may still continue to win good deals, continue to drive a lot of signings, but we’ll have to keep a very close watch on the project conclusions and the project getting over or the run-offs that happen.
Mohit Jain — Anand Rathi — Analyst
Understood, sir. Thank you, and all the best.
Angan Guha — Managing Director and Chief Executive Officer
Thank you, Mohit.
Operator
Thank you. The next question is from the line of Vibhor Singhal from Nuvama Equities. Please go ahead.
Vibhor Singhal — Nuvama Equities — Analyst
Yeah, hi. Thanks for taking my question, and congrats Angan for a very good first quarter. A couple of questions from my side. One, we just concluded to Mohit’s question, [Indecipherable] and I think the commentary that you have mentioned about the closure not being [Technical Issues]. Given the pipeline, the visibility that we have, do you expect this kind of [Indecipherable] exact number [Indecipherable].
Operator
Sorry, to interrupt you. The line is very unclear.
Angan Guha — Managing Director and Chief Executive Officer
We can’t hear you.
Vibhor Singhal — Nuvama Equities — Analyst
Am I audible, sir.
Operator
This is a little better.
Angan Guha — Managing Director and Chief Executive Officer
Yeah, now it’s better, yeah.
Vibhor Singhal — Nuvama Equities — Analyst
Yes. I am so sorry. Yeah, so my question was on the deal flow number. So as you mentioned that there is too much of uncertainty right now in terms of when those — the deal flow closure happens and then the revenue start getting recognized. But in terms of at least deal flow, do we have good visibility that deal flow — somewhat kind of deal flow could actually continue for the next two to three quarters? And do you think there are pockets where you could see some negative surprises or pockets of strength that you are seeing in our portfolio?
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so in our portfolio, look, our pipeline is only improving. Now, the deal closure is also a manifestation of clients wanting to sign the deals, right? So if you look at the performance that we delivered in 3Q and 4Q, it’s probably one of the better performances that we’ve had any quarters, in so many quarters earlier, outside of the Invacare deal in 2019. So from that perspective, the last two quarters have been very strong. Now, going forward, it is a little hard for me to comment in terms of deal closures, because we don’t know whether the customers will sign, we’ll push out the closures, etc. But if the deal pipeline is any indication, our pipeline is only going up every month, every day, every week. The closures is, of course, a different issue and we will keep a very close watch on it.
Vibhor Singhal — Nuvama Equities — Analyst
Got it. And any color on the manufacturing vertical, if you could just maybe provide. How are we seeing the client conversations in that vertical? Typically, when we have our economic slowdown or efficient[Phonetic], as we are looking at in terms of the geography, typically, the B2C companies tend to have — tend to cut spends earlier and then followed by B2B companies, like manufacturing segment. Anything that we’re seeing on that part or anything that that you’ve picked-up in the conversation with the clients?
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so the manufacturing, like I said, if you look at our performance, it has been the second-biggest growth driver for us outside of BFSI. BFSI clearly has been a big growth driver. Now going forward, we– you are right, we are seeing some softness in manufacturing as well, but I feel manufacturing will bounce back much sooner than the healthcare business, only because — and that is also a reflection of our ERP business. Somebody asked me that question, is the ERP business is going to turnaround now? And I said, ERP, we are in the bottom. Going forward, we will only grow. And that also has a big rub-off on the manufacturing vertical, as you know. I feel the discretionary spend will stop, but the spending will be actually moving into more efficiency-based conversation rather than transformation-based conversation. So we keep a close eye on it, but again, the funnel is improving. So I’m cautiously optimistic on manufacturing.
Vibhor Singhal — Nuvama Equities — Analyst
Got it, got it. Thanks, Angan. Thanks a lot for answering my questions, and wish you and the team all the best for FY ’24.
Angan Guha — Managing Director and Chief Executive Officer
Yeah, thank you.
Operator
Thank you. We have the next question from the line of Abhishek Shindadkar from InCred Capital. Please go ahead.
Abhishek Shindadkar — InCred Capital — Analyst
Yeah, hi, thanks for the opportunity and congrats on a good quarter. Two questions. The first is, is our commentary on ERP is also hinged on what we heard from SAP? That is one. Or it is more about the Oracle Practice, if you can just elaborate that? And the second is on the financial services side, again, encouraging commentary on financial services in the backdrop. So what’s driving and what are the kind of spends that we are seeing on the digital side, if you can help us understand that. Thank you.
Angan Guha — Managing Director and Chief Executive Officer
Okay. So Abhishek, first of all, let me take the financial services question. So we must not confuse our financial services business with some of the other commentary that you are seeing, because like I said, our financial services business is very, very small, right? So we are seeing, at least the clients that we serve in the financial services business are spending with us, may not be driving transformation program, but definitely driving cost and efficiency programs, and we are benefiting from the client spend in financial services, only because of our base is small. And we hope to kind of capitalize and grow in that area. On the ERP side, again, I’m not aware of the SAP commentary, but I can only tell you that our growth on ERP is very, very broad-based, whether it’s JDE, Oracle, whether it’s SAP, it is broad-based. So I’m seeing green shoots of the ERP revival and that may have a rub-off effect on our manufacturing vertical as well.
Abhishek Shindadkar — InCred Capital — Analyst
Got it. Just a follow-up on the financial services side. So we are not seeing any risk of vendor consolidation. What I was trying to understand the risk in the vendor consolidation exercise that could come. So that was the whole idea of asking the question.
Angan Guha — Managing Director and Chief Executive Officer
Yeah, the clients we serve, we are benefiting from vendor consolidation, as far as we’re concerned.
Abhishek Shindadkar — InCred Capital — Analyst
Great. Thank you for taking my question, and best wishes for ’24.
Angan Guha — Managing Director and Chief Executive Officer
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Sandeep Shah from Equirus Securities Private Limited. Please go ahead.
Sandeep Shah — Equirus Securities Private Limited — Analyst
Yeah, thanks for the follow up. Just, Angan, wanted to understand because of some macro changes, are you reflecting any client-specific issues within your top 10, top 20 accounts as a whole?
Angan Guha — Managing Director and Chief Executive Officer
So Sandeep, look, I mean, again, whatever I say is a point in time, right? I can’t predict the future. But at a point in time, as of today amongst all our top 20, top 30 clients, we don’t see a client-specific issue. But that is again today, I can’t comment about tomorrow or how things will change, because as you know, typically in the financial services industry, the healthcare industry, things can turn overnight and can turn bad. So I can only give you a comment that, as we stand today based on the conversations that we’ve had with all of our clients, I don’t see any client-specific issue in the clients that we serve. Now, our clients are also having a lot of challenge in terms of their discretionary spend going away, but they’re wanting to stop spending around transformation projects, which is why I talked about the run-offs a little while ago, right? So we can book all the orders that we are booking, but if the run-offs becomes higher, then it is very, very difficult to predict. But today, we don’t see that issue and I can’t comment on the future.
Sandeep Shah — Equirus Securities Private Limited — Analyst
Okay. And the vertical-wise demand, Angan, which you have provided. Is it fair to say, in the near-term, BFSI, there we are more optimistic, which is roughly 20%, 25% of our revenue? So as we invest on the portfolio, we may see a better visibility and recovery starting from H2?
Angan Guha — Managing Director and Chief Executive Officer
Yeah, I would tend to agree with that. So financial services at our size, I think, will be a growth leader. But the other three verticals, we will probably have a better picture H2 onwards.
Sandeep Shah — Equirus Securities Private Limited — Analyst
Okay, okay. And Angan, just a broad question. Before you joined, Birlasoft has seen a lot of volatility in the growth rates, they’re — some of that was also being driven through some project-based nature of the revenue. So in your restructuring, how are you addressing and repairing this issue as a whole? That’s question number one, yeah. And the second, on the BFS, is there any exposure to regional banks, which we cater to, especially in the US?
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so I’ll answer the second question first. So we don’t have any exposure to regional banks, so that we don’t have. From the first question perspective, again, it’s a long-term journey, Sandeep. Look, we understand that one of the reasons why it was becoming very difficult to predict revenue was because we had a lot of project-based work, right? So slowly and steadily, we are moving away from just project-based to more outcome-based, more transformational work, more annuity work, right? So we are incentivizing our people, we are seeing the pipeline to slowly move into annuity kind of work. But remember, this kind of a change does not happen over a couple of quarters, it will probably happen over the next 12 to 18 months, but we are committed to do that. But again, we must also realize that the macroeconomic situation is not very favorable. So you may still see run-offs. I think that’s what you’re referring to. So if the run-offs happen, then obviously, it becomes very difficult for the management team to predict anything in the future. But I can only tell you that, as a management team and as team Birlasoft, our endeavor will be to continue to deliver strong execution quarter-on-quarter while we work on the long-term in terms of moving our revenue cycle into more annuity-based rather than project-based.
Sandeep Shah — Equirus Securities Private Limited — Analyst
Okay. And last two questions if I can squeeze more on clarity. When are we planning for the results effective which quarter? And your EBITDA margin commentary for 15% to 16% ex of Invacare will be for the whole of FY ’24 or would be largely Q3, Q4 driven kind of a target achievement?
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so we have wage hikes in Q2. So Q2 is when we will — impact of wage hikes. So H2 is when I think we will be able to stabilize between 15% and 16%. So I can’t comment on the full year. Sandeep, as you know, it’s going to be very, very difficult, but our endeavor will be to get to the 16% as we go to H2, and hopefully exit at 16% as we exit FY ’24.
Sandeep Shah — Equirus Securities Private Limited — Analyst
Thanks, and all the best.
Angan Guha — Managing Director and Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Anmol Garg from DAM Capital. Please go ahead.
Anmol Garg — DAM Capital — Analyst
Yeah, hi. Thanks for the opportunity. So I have a couple of questions. Firstly, we have been declaring strong deal wins in the last couple of quarters. We’re just taking our book-to-bill ratio of almost at 2x for this quarter. From that perspective, just wanted to understand, has there been any increase or change in the duration of the deals that we have won in the last two quarters? Yeah, that’s question number one. And secondly, just wanted to understand how we get our M&A and what is the strategy behind the scenes?
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so great question, Anmol. See, for the first question, if you look at our deal wins, right, Q3, $231 million TCV, Q4 $286 million TCV, but out of the $286 million TCV, 40% was new, right, 60% was renewal. So that — just so that you know and there is extreme clarity of the fact that 40% of that $286 million was essentially new signings, right? And like I said, we will convert all the new signings into revenue. Our problem is not that. Our problem is how much amount of run-offs will happen and how much amount of run-offs can we avoid is the key question, which is why the predictability on the revenue for the year becomes very, very hard, which is why I’m not giving a forward-looking statement in terms of revenue growth. In terms of M&A, we will definitely look at it, but I don’t think now is the right time. Right now, we are focusing on hiring the talent, making the investments, creating a leadership team, which will be focused on execution for the next three, four, five quarters. But — and like Kamini said, and you heard Kamini say this, we are generating free cash flow, we are strengthening our balance sheet, and we will continue to add cash to our balance sheet. And whenever the right asset comes along, we will definitely look at it.
Anmol Garg — DAM Capital — Analyst
Sure. Thanks. Just one follow-up on the first question that I asked. In this $286 million, includes any large deals?
Angan Guha — Managing Director and Chief Executive Officer
There is — so we don’t give deal commentary around the individual customers, but I can tell you, we won one deal from a customer of ours, which was $50 million, that was our largest deal, and 60% of that was renewal and 40% was new.
Anmol Garg — DAM Capital — Analyst
Sure, sure. Thanks. Thanks for taking my question, Angan.
Operator
Thank you. The next question is from the line of Abhishek Shindadkar from InCred Capital. Please go ahead.
Abhishek Shindadkar — InCred Capital — Analyst
Hi, thanks for the opportunity again. Two questions or data points. First is, is it possible to quantify the growth ex Invacare for quarter three. And second is the $869 million TCV for ’23. So what would have been that number if we kind of exclude Invacare? What we’re trying to understand is has the booked in adjusted for the loss of Invacare account and what could have been the actual growth rate if we add back that in the numbers?
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so, as you know, in Q3, we had a flattish quarter, including the $4 million of Invacare, right? So if you were to back that $4 million, I mean, you can do the math, we’d probably be negative growth, but including Invacare, we were at a flat growth 3Q. In Q4, however, backing off Invacare, we delivered 3% quarter-on-quarter growth, but if you were to take Invacare, reportedly, we delivered about 0.5%. Now, as far as the TCV signings are concerned, as you’ll — as you know, our TCV signings grew at about 25% year-on year, right? Now, we have not considered any Invacare in that TCV signings because Invacare was signed probably two years ago. So that obviously did not reflect in FY ’23 signings. So FY ’23 signings of $886 million, which is a 24% growth, is outside of Invacare.
Abhishek Shindadkar — InCred Capital — Analyst
Great. Thank you for the follow-up, and again, best wishes for ’24.
Angan Guha — Managing Director and Chief Executive Officer
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Girish Pai from Nirmal Bang Equities. Please go ahead. Mr. Pai, you are not audible.
Girish Pai — Nirmal Bang Equities — Analyst
Hello?
Operator
Hello?
Girish Pai — Nirmal Bang Equities — Analyst
Yes, Girish.
Operator
Mr. Pai?
Girish Pai — Nirmal Bang Equities — Analyst
Yeah.
Operator
Yeah, we request you to please move to an area where you’re getting better network, so they can hear you clearly. Ladies and gentlemen, the current participant in the queue has dropped the queue. The next question will be from the line of Sugandhi Sud from InCred Asset Management. Please go ahead.
Sugandhi Sud — InCred Asset Management — Analyst
Yes, hi, thank you for taking my question. I just want [Technical Issues] your margin guidance, what kind of revenue expectation are you building in, because there is a little bit of uncertainty and you guided to a muted number, given the macro and also Invacare. So — and also if you could [Indecipherable] you are building in, in terms of optimization, if you could break that down.
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so I’ll probably take the first question, Sugandhi, and then if Kamini wants to add, I’ll hand it over to Kamini. So Sugandhi for us, we are not working on a revenue guidance at all. Like I said, we will continue to execute quarter-by-quarter take each quarter at a time, and every quarter, our endeavor will be to try and show positive revenue growth. On the other hand, operationally, like I said, we’ve restructured the organization, we’ve driven a lot of synergies, thanks to delivery coming under one roof, and all of the other restructuring items have helped us to save a little bit of cost. So that’s one lever. Second lever, of course, is our ability to get more pricing power from our clients. That’s the second lever. But also to drive more pyramid, right? So we are looking at all the parameters. But Sugandhi, you must also understand, operationally, we will do a lot of stuff in terms of cutting cost out, so that our EBITDA could improve, but equally, we will make investments on the front-end. As you would have seen, our sales headcount and our sales investments have gone up, so that will continue to go up. So you should look at our performance based on all the operating levers that we use to drive costs down. We continue to invest in our business. And netting that off, we, as a management team, are confident to get to the 15% to 16% as we enter H2 and hopefully exit the year FY ’24 with a 16%.
Kamini Shah — Chief Financial Officer
Yeah.
Angan Guha — Managing Director and Chief Executive Officer
Kamini, any comments?
Kamini Shah — Chief Financial Officer
No, I think, Angan, you’ve covered it all. Yeah, Sugandhi, I think that covers all of it. What Angan has called out, we will continue to optimize and I think a lot will depend on the macroeconomics, the pricing power, if you are able to get that. And we will continue to invest in our business, because that will become a vehicle for growth for us.
Sugandhi Sud — InCred Asset Management — Analyst
Sure. And if you could just throw some color on trends that you see on the enterprise ERP and probably what you see — what has changed that is leading to a little bit more optimism and being able to call out the bottom?
Angan Guha — Managing Director and Chief Executive Officer
No, so nothing has fundamentally changed, Sugandhi. The only issue is, our ERP quite frankly has not done very well over the last couple of years, right? So from that perspective, we are seeing a bottoming out of our performance, and going-forward, we are only seeing a little bit of green shoot only because of the pipeline is getting stronger as we go forward. But look, I don’t want to call victory so early. We have just shown a little bit of growth, right? We have to sustain this growth over a period of next two, three quarters before we can claim victory.
Sugandhi Sud — InCred Asset Management — Analyst
Sure. That’s helpful. Thank you so much.
Operator
Thank you. The next question is from the line of Karan Uppal from PhillipCapital India. Please go ahead.
Karan Uppal — PhillipCapital India — Analyst
Yeah, thanks for the opportunity. Just one question in terms of vendor consolidation. So here, you mentioned that in the BFSI, you are benefiting because of the clients you have. But for rest of the three verticals, your commentary was a bit cautious. So is it because of the competition getting more aggressive in these verticals and you’re facing some challenge in vendor consolidation there?
Angan Guha — Managing Director and Chief Executive Officer
No, so Karan, it is only because, BFSI, we are a very small vertical. Our other verticals are bigger than BFSI. And it is also a manifestation of the client of clients you serve, right? As you know, vendor consolidation obviously happens in your own client base, where you either benefit or you lose out or even in clients that you are not present in and you can positively impact on it. So remember, our financial services business is small, it is still on the nascent stage. And as a result, the clients that we work on, we are only benefiting. And in many ways, it has also a manifestation of the strong execution engine that we have in BFSI. We have a strong team. We have a good team. We have a good leader. And along with that, I think we will continue on that execution. On the other segments, again, we have built a very strong team in all segments. We’ve built a strong team in manufacturing. We’ve built a strong team in life sciences. We have built a very strong team in E&U. Like I was saying in the last earnings call and this earnings call, some of these vertical heads are very new, right, and they are building up their teams, and they are building up their businesses. So it is more than fair that we look at these verticals over the next two, three quarter period, and I am reasonably certain that at least in our clients that we are present in, we will only be on the positive side of vendor consolidation, if at all.
Karan Uppal — PhillipCapital India — Analyst
Okay, thanks. Thank you, and all the best for FY ’24.
Angan Guha — Managing Director and Chief Executive Officer
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Devang Bhatt from IDBI Capital. Please go ahead.
Devang Bhatt — IDBI Capital — Analyst
Hi, sir, thank you for taking my question. So in BFSI, which segments particularly are you seeing good traction? And in terms of — you still have good cash in your balance sheet. So are you planning to go for some inorganic growth?
Angan Guha — Managing Director and Chief Executive Officer
Yeah, so Devang, I answered this question earlier also. We will definitely look at inorganic, but right now, I don’t know what the inorganic growth is the right thing to do, right? For now, we will be focused on executing on our quarter-on-quarter performance. We’ll be focused on building our capability and we’ll be focused on building our leadership. And once we have the talent and capability and everything in place and we will look at an acquisition in the future. But right now, we are not looking at anything actively. In BFSI, two segments which are strong for us, one is lending and one is payments, and we are seeing big traction both on lending and payments.
Devang Bhatt — IDBI Capital — Analyst
Thank you. Thank you for taking my question.
Operator
Thank you. The next question is from the line of Jyoti Singh from Arihant Capital Markets. Please go ahead.
Jyoti Singh — Arihant Capital Markets — Analyst
Yeah, thank you, sir, for the opportunity, and congratulation on the good set of numbers. As I got a chance in the last, so most of my question already got answered. But just one question that I wanted to ask that if I — like you are very optimistic about the macroeconomic concern and about the growth in all these segments. So what exactly your view for FY ’24, what we can expect as compared to FY ’23?
Angan Guha — Managing Director and Chief Executive Officer
No, no, so I’m not optimistic at all, quite the contrary actually. I’m not bullish about the macroeconomic, in fact I feel there is a lot of headwind that is coming our way and it is very uncertain out there. So far from being optimistic, I’m actually a pessimist when it comes to the macroeconomic situation. All I’m saying is, for us, as Birlasoft, the job will be on quarter-on-quarter execution. And because the situation is so volatile, it’ll be very hard to give a growth commentary for the year. I’m getting the company to focus on quarter-on-quarter execution, and that is something that we will be sharply focused on going into the next couple of quarters.
Jyoti Singh — Arihant Capital Markets — Analyst
Okay. And sir, second question on the financial side. Like, as we are doing great, so have Company has given any thought that we can increase the revenue contribution in that segment as we are doing great in that.
Angan Guha — Managing Director and Chief Executive Officer
Sorry, which segment again?
Jyoti Singh — Arihant Capital Markets — Analyst
BFSI.
Angan Guha — Managing Director and Chief Executive Officer
Yeah. So BFSI, we continue to be bullish and we are continuing to invest in BFSI. But you must also understand, we are investing in all our businesses. It is not only about BFSI. BFSI has shown the highest growth in the quarter that just concluded, but that doesn’t mean we are not invested in life sciences or manufacturing or E&U. We are equally invested in all the verticals. These are the four verticals that we have chosen to go for, and we will be more than invested in all the four verticals.
Jyoti Singh — Arihant Capital Markets — Analyst
Yes, definitely. But if we compare other competitors, they have more revenue contribution as we have.
Angan Guha — Managing Director and Chief Executive Officer
Yeah, I know. So like I said, BFSI is a small vertical for us. Obviously, we want to grow it ahead of the market, so that the contribution of BFSI and our overall business continues to increase.
Jyoti Singh — Arihant Capital Markets — Analyst
Okay, thank you.
Operator
Thank you. Ladies and gentlemen, that was our last question for today. I would now like to hand the conference over to Mr. Angan Guha, CEO and MD, Birlasoft Limited, for the closing comments. Over to you, sir.
Angan Guha — Managing Director and Chief Executive Officer
Thank you. Thank you so much. So look, I would like to thank each one of you for your interest in Birlasoft for the time that you have taken and spend with all of us today and for your insightful questions. As we shared the solid fundamentals of our business, the momentum with which we are entering into the new financial year and the investments that we are making to strengthen our capabilities will position us very well to meet the challenges and the increasingly uncertain macro that we spoke about. But I look forward to speaking with you and interacting with you next quarter again. In the meanwhile, please feel free to reach out to Abhinandan for any clarifications or feedback. So thank you once again and have a great evening. Thank you. [Operator Closing Remarks]