L&T Technology Services Ltd (NSE: LTTS) Q1 2026 Earnings Call dated Jul. 16, 2025
Corporate Participants:
Unidentified Speaker
Sandesh Naik — Head of Investor Relations
Amit Chadha — Chief Executive Officer and Managing Director
Rajeev Gupta — Chief Financial Officer
Analysts:
Unidentified Participant
Manik Taneja — Analyst
Karan Uppal — Analyst
Vibhor Singhal — Analyst
Ravi Menon` — Analyst
Sandeep Shah… — Analyst
Rahul Jain — Analyst
Presentation:
operator
SA S.A. Ladies and gentlemen, good day and welcome to the Q1FY26 conference call of LT Technology Services Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandesh Nayak, head of Investor Relations. Thank you. And over to you sir.
Sandesh Naik — Head of Investor Relations
Thank you, Rayo. Hello everyone, I am Sandesh and welcome you all to the Earnings call of LT Technology Services for the first quarter of FY26. Our financial results, investor release and press release have been filed on the stock exchanges and are also available on our website www.ltts.com. i hope you’ve had a chance to go through them. This call is for 60 minutes. We will try to wrap up the management remarks in 20 minutes and then open up for Q and A. The audio recording of this call will be available on our website approximately one hour after the call ends.
With that, let me introduce the leadership team present on this call. We have with us Amit Chada, CEO and MD Abhishek, Executive Director and President, Alan Saxena, Executive Director and President and Rajiv Gupta, cfo. We will begin with Amit providing an overview of the company performance and outlook followed by Rajiv who will walk you through the financial performance. I now invite Amit for his opening remarks.
Amit Chadha — Chief Executive Officer and Managing Director
I hope I’m audible and you can hear me fine. So thank you all for joining us on the call today. First, let me provide the key highlights on our Q1 performance in US dollar terms.
Our revenue was up 13.6% year on year while our Q1 Smart World seasonality predominantly impacted revenues to decline by 2.9% quarter on quarter. Our major markets on North America and Europe continue to grow sequentially. Our most profitable Segment sustainability grew 16.4% year on year and 4.1% quarter on quarter to cross the 100 million quarterly milestone and is now a 400 million plus annual business on a run rate basis. Therefore, all three segments are at 400 plus annualized revenue based on targeted efforts to pivot on growth and improve our market share. We continued with the large deal momentum in Q1 to surpass $200 million in large deal TCV for the third consecutive quarter which includes 150 million deal, 320 to 30 million deals and 610 million plus deals.
Again for clarification, we will going forward report LDTCV which is large deal TCV and these are deals above $10 million each. Our Go to deeper scale strategy and proactive investment in new age technologies are leading to stronger partnership with clients and a robust TCV booking. The LDTCV booking and TCV booking the EBIT margin held at 13.3 for the quarter. This is in spite of the revenue impact of swc, seasonality, headwinds in the mobility segment and support extended to strategic customers as highlighted in the previous earnings call. We expect EBIT margins to see an improvement in the coming quarters as growth gets broad based across segments.
Now a few headlights and highlights on our Technology and Innovation charter. Today our engineers have deployed multiple programs for clients in AI and have filed 206 patents in this domain. AI is also becoming central in our deal wins and in establishing strategic partnership with our clients. Additionally, we are launching Plex AI, our proprietary AI framework which accelerates product development life cycle for global customers. PLEX AI combines smart prompting, contextual intelligence and agentic workflows to significantly reduce product lifecycle. PLEX AI was originally incubated in the mobility segment but has now been scaled and propagated to other segments using a multi vertical cross poly innovation approach.
Overall patent portfolio stood at 1550 out of which 952 are co authored with clients and the rest are filed by ltts. To address specific areas of client investments in the US market, we inaugurated a new design center in Plano, Texas focused on cutting edge technology, cybersecurity and AI. This will help us to expand our footprint in our key market helping us gain further market share. As an ITAR compliant facility, the center is also equipped to design, develop and test defense related products and systems. This investment made ahead of the curve underscores ltts commitment to delivering advanced solutions in AI and tech and establish much more near shore centers tailored to evolving needs of our clients.
With that let me move to segmental performance and outlook. We’ll start with mobility. So starting with some good news, the trucks and off highway and aerospace and rail subsegment grew well sequentially and year on year for us. The auto segment continues to be in flux and let me provide some color around bev, Hybrid and ice. China’s alternative, low cost innovation and stack in this area is creating disruptions to existing industry causing further challenges to established global players. There is continued demand by consumers to get more SDV features which with high cost of ER&D of development of OEMs in US and Europe is becoming slightly difficult.
Our investment in building solutions like LTTS iDrive and Stacks for EV and hybrid coupled with our offshore delivery model which provides a lower cost model as compared to a completely on site model have positioned us as a partner of choice for our customers basis which we continue to win. New programs which I will detail in a bit. There is however a short term pause on some programs and delayed starts in others. We expect these dynamics to keep automotive muted in the short term for another couple of quarters with growth returning after that. On to the deals we have won around sdv, AI, next gen product development, software design and Digital engineering include a multi year deal with a US Automotive components maker to deliver engineering support including Aspice compliant systems, software, functional safety, cyber security and quality assurance.
We will name the strategic supplier for Thyssen Group Steering and Trayton Group, a satellite company awarded LTTS a significant deal for software design, development and embedded engineering for airborne systems. Overall the Mobility segment we have won five 10 million plus deals in Q1. This vindicates our solution stack and we are actively engaged in securing many more deeds. The pipeline in mobility overall remains robust with a lot of action in Auto, tnoh, Aero and Rail. We continue to work with our clients to get these to closure. We believe that overall mobility will stay muted in the near term and expect Turnaround in the second half of FY26.
Coming to sustainability the sustainability segment did well with 16.4% year on year and 4.1% quarter on quarter growth to cross the 100 million milestone for the first time in a quarter. The large deal closure in the previous quarters are ramping up leading to further growth during the year. More than half of the large deals won in Q1 are in the sustainability segment which is our highest profitable segment. Sub Segment Details In Plant engineering we continue to see strong demand in oil and gas and CPG led by Greenfield and Brownfield CapEx projects. We are also seeing ongoing demand in plant modernization for increased efficiency, sustainability and safety led projects for legacy plants.
Key clients continue to ramp up with us. In fact Q2 will see us back with a 50 million account on an annualized run rate basis which is a milestone that we should all be happy and proud about in a large deal of $50 million. We were chosen by a global energy major for enterprise data and digital services based entirely on our proprietary tools. Moving on to the industrial subsegment, we continue to see ramp ups of large deals signed and a robust pipeline of deals going ahead because of our AI led interventions in the PDLC offerings.
A couple of details we have signed a strategic agreement with tenant company to advance sustainable new product development, we will set up a dedicated offshore or have set up a dedicated offshore center engineering center for them. Second, we’ve also signed a definitive agreement to support product sustenance and lifetime development for a semiconductor equipment manufacturing company across multiple product lines. Overall, for the sustainability segment we see an increased large deal pipeline and expect the growth momentum to continue with both industrial and plant sub segments doing well this year. Now to Tech, the Tech segment grew 29.4% year on year as it includes the benefit of IntelliSwift revenue for the quarter.
Though as expected, Q1 is down sequentially on account of seasonality of the Smart world sub segment with the integration of IntelliSift Complete, the software and platform subsegment with its software and agentic AI offerings has seen a good response from our customers across hyperscalers, fintech and healthcare. The media and tech subsegment continues to evolve with new technology areas and experiencing significant transformation driven by advancements in AI and immersive technologies. We continue to grow in the US market and have seen some traction in our semiconductor accounts. We are pursuing some deals in this area and expect to close them Shortly.
In the MedTech subsegment, demand is being led by AI investments across digital manufacturing, sustenance engineering and quora. All of them have shown good growth despite some delays in decision making. In the US market, we have onboarded new logos especially in ophthalmology space which should aid further growth. Overall, MedTech is expected to grow further in the second half of the year as we look forward in the SmartWorld space, we have developed a domain centric computer vision ops platform applicable for urban and smart spaces, public safety, energy, utility and manufacturing. We recently won a Safe City project in India, leveraging AI and analytics to enhance public safety with an adaptive travel and traffic control system.
Our foray in the Middle east is progressing, setting up a strong foundation with a pipeline and we expect that FY26 will be the year when we start revenues from the Middle East. In the tech segment there are various large deals in advanced stages of negotiation which we hope to sign off in the coming months. This will help us continue tech’s growth trajectory from Q2 onwards. Before I come to outlook, let me provide some overarching color on the state of the market as we see today. 1. Given the dynamic nature of the market, our clients are still little cautious on decision making, but based on multiple conversations and a confidential poll that we ran across our client base, a large number of our clients see things stabilizing and as a result H2 potentially being better than H1 2, we are seeing AI become a central area of focus with our clients.
The AI wave of engineering ERD is beginning to gain traction and this is on account enterprise tech leaders who believe that they are behind their peers in embracing AI to accelerate product development and improve productivity. The poll also finds that 30% of the clients are engaged in full fledged AI programs while others are still in POC stage. Therefore the AI spend appears to be real. This is resulting in deals and programs coming up for bids and rebids. Third, the setting up of localized and regional supply chains along with software defined everything. Industrial automation in the near term and robotics in humanoids in the medium term will continue to drive spends.
With that let me discuss our outlook. Our unique balanced three segment approach allows us to grow in a de risked manner and safeguarding us in the current uncertain market environment and tightened demand conditions. I am encouraged by our robust backlog order book which has been increasing quarter on quarter and year on year and a healthy pipeline of 50 million plus deals slated to close in the coming quarters backed by increased order book with a focus on resilience and profitable growth. We look forward to a double digit growth over FY25 while maintaining a medium term outlook of $2 billion of revenue.
Thank you all for your continued support with this. I’ll now hand over the call to Rajiv and then stay back for questions. Thank you so much.
Rajeev Gupta — Chief Financial Officer
Thank you Amit. Greetings to all of you. Let me begin with the key highlights for quarter one FY26 our focus on growth has led to another quarter of healthy large deal wins over $200 million which provides comfort that H2 will be better compared to H1. The sustainability segment now stand at $100 million quarterly run rate and all our three segments have crossed the 400 million dollar annual run rate. This vindicates our diversification strategy and a well balanced portfolio especially during these dynamic times. This quarter saw 13.6% year on year growth in dollar terms though there was a decline in sequential revenues due to seasonality of smart world business, headwinds from macro environment and challenges in automotive sectors.
Despite these challenges, our margins have been resilient and stable compared to previous quarter. We continue to innovate and build next gen solutions. Glad to share that we’ve been recognized in the leadership quadrant by ISG in Aerospace and Defense Services 2025 in Europe and by HFS in Engineering Research and development service providers 2025. With that let me take you through Q1 FY26 financials starting with the P and L, our revenue for the quarter was INR28.66 crores, a growth of 16.4% on year on year basis and a decline of 3.9% on sequential basis. Due to reasons mentioned earlier, our EBIT margin for the quarter came in at 13.3% which saw a slight improvement over the previous quarter.
We expect margins to show gradual improvement from year on moving to below EBIT. Talking about other income, other income was 51 crores higher on sequential basis majorly due to forex gains. Our effective tax rate for Q1 was 26.9% better compared to our expected range of 27.5%. Net income for quarter was INR 316 crores up 1.5% on quarter on quarter basis which is 11% of revenue. Moving to balance sheet, Let me highlight key line items. Our Q1 DSO was at 98 days compared to 88 days in Q4. Unbilled days at 17 in Q1 compared to 18 days in Q4.
The combined DSO including unbilled stood at 116 days compared to 106 days in Q4 which is still within our target range of 110 to 115 days for the year. We expect this to improve as the year progresses. Our free cash flows came in -28 crores due to seasonality of our smart world business. Our cash and Investment stood at 2,431 crores at the end of quarter one versus 2,981 crores at the end of quarter four. This is an account of payment of dividend and balance consideration of IntelliSwift acquisition moving to revenue metrics in dollar terms, we reported revenue of $335 million compared to $345 million in Q4 decline of 2.9% in reported terms.
Talking about segment margin performance for quarter one, FY26 mobility segment margins for Cuman came in at 15.3% lower compared to previous quarter stemming from delayed decision makings of large deals, pauses in existing programs and discounts being sought by customers. Sustainability margins for quarter came in at 27.4% showing a significant improvement due to ramp up of large deal wins in both sub segments. We are witnessing healthy pipeline and deal closures in this segment which will continue to aid revenue growth and margin improvement in the coming quarters. Tech segment margins for the quarter came in at 9%.
Please to share that our integration plan for intellisived acquisition is on track showing improvement in revenue growth and margins though we saw a decline in this segment in the margins compared to previous quarter due to continued strategic support for select programs and customers. Moving on to operational metrics, the on site offshore mix showed slight improvement towards offshore compared to quarter four. Offshore percentage now stands at 56.1%. The T&M revenue mix was 62.2% in Q1, slightly higher compared to quarter four. With respect to client profile which indicates number of million dollar plus accounts showed a sequential improvement in the 10 million, 5 million and 1 million category.
The client profile will continue to improve in coming quarters. Our client contribution to revenue was slightly muted compared to quarter four in the top 20 category. We expect revenue from top customers to improve going forward as we are running targeted programs on client mining. Headcount came in at 23,626 in Q1 compared to 24,258 in Q4 while attrition came in at 14.8%. We’ve been leveraging AI and automation for customer projects and also driving internal efficiencies. We now see a trend of non linearity between revenue and headcount. Realized rupee for Q1 was around 85.48 to the dollar, an appreciation of around 1.1% versus quarter four.
Before I conclude, let me provide visibility on the margin trajectory going forward. We expect our EBIT margin trajectory in H2 to be better than H1 based on continued momentum on large deal wins, revenue growth in higher margin segments and leverage on operational efficiency including AI led automation. We continue to aspire for improving ebit margins to mid 16% levels between Q4FY27 and Q1FY28. Thank you. I now hand it over to the moderator for questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press Star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press Star and two Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Manik Taneja from Axis Capital. Please go ahead.
Manik Taneja
Hi, thank you for the opportunity. First question was for Amit. Basically some of your other peers seem to be slightly more positive with regards to the automotive passenger vehicle demand while your commentary seems to be slightly more somber. If you could just talk about this customer specific impact that because of which you see a more muted performance. That’s question number one. The second question is with regards to the margin outlook and while we continue to retain the mid 16% EBIT margin target by Q4 27 or Q1 28. Just wanted to understand if you could broadly talk about how should we be thinking about the scope for recovery across gross margins and SDNA on a go forward basis.
Amit Chadha
Okay. So Manik, first of all on a lighter note, we don’t do automotive only. We do a lot more. Right. The diversified player, she’s a good news here. Now if I specifically talk of auto, see I’ll tell you generically and I’m not talking ltds clients specifically US automakers are in a flux because they were investing in EV till two quarters ago and now are not sure whether to invest in continue invest in EV or should they go back to ice? Right. Number one, in the case of European players which is facing competition from China and the Chinese stack and EV stack, the China EV players are selling cars at a third and a fourth of the price of the same cars available in from the European OEMs.
That is putting immense pressure on them to reimagine the stack. At the same time, SDV features that were being rolled out by US OEMs and European OEMs are being pushed out because of the dynamics in the market. So that is creating the pauses, that is creating a little bit of dynamism, shall I say. Now the positives are that European traditional, European ER and D players and the small amount of U.S. players, and they are very few and you are aware of it as well, are unable to service the later gen offerings that are required by the OEMs out there.
That is creating an opportunity for companies like LTTS and our peer group. We also announced a 50 million win last quarter. Just before the quarter ended in auto, I reaffirmed that we had. In terms of the wins we have had in this quarter, I am being cautious on grounds of prudence in the auto sector. The deals are robust. The pipeline that we have got is robust. Now it depends on what will close. When and if it does, it will turn out as an upside for us. So that’s broadly where I am on auto. I also want to reaffirm to you, we have not paused any investments.
In fact, the Plex AI tool came out of mobility. We could have killed it. Thinking that nothing will happen in Mobility right now, but we’ve actually taken it forward. Second, LTTS iDrive 1.0 was launched last year. LTTS 2.0 iDrive 2.0 will be launched in the next two months. We already have production customers for LTTS iDrive 1.0 and we have customers lined up for LTTS Drive 2.0 as well. So signs, like I said, market a little bit of flux but there is an opportunity. Let us see where it goes. The year is to be played out.
Rajiv, I want to hand over to you for the margins.
Rajeev Gupta
Sure. So Manik, to talk about the margins there are various levers that we continue to work on. First of course the growth and quality of revenue. Right. We’ve been talking about large deal wins and particularly we are seeing good traction of large deal wins in sustainability segment which is of course going to improve the mix of revenue within high margin segments leading to improvement in margin. That’s one. Second is we’ve talked about productivity levers so operational efficiency be it in terms of pyramid, fresh air intake, offshoring, looking at automation, AI etc. These are areas that we continue to work upon.
Third, from an SGNS standpoint, I would guide that you should model between 10.5 to 11.5% SGA cost. Fourth, we’ve talked about IntelliSwift integration plan. This is an integration plan that we built for the next eight quarters where you will see incrementally margin improving. So these are all the areas that we’re working upon. Largely what we’ve Talked about is H2 will see better margins compared to H1 because some of the strategic support that we called out in Q4 continues to be there in Q1 and may extend even in Q2. But thereafter we expect that some of these strategic supports that we are calling out should turn into either billing or phasing out beginning quarter three.
Hence H2 margins will be better compared to H1. So those are few things which gives us the confidence to get to mid 16% levels by quarter four. FY27 or quarter one? FY28. Sure, that’s helpful. Clarifying question for Amit with regards to the strong pipeline that you spoke about and the continuous pressure on the European OEM players, do you think probably not FY26 but sometime in FY27 we see a repeat of the kind of growth that we saw in 22 and 23 in the mobility segment.
Amit Chadha
So again Manik, we are getting into conjuncture here. We are reading tea leaves too much. My humble request to you dear friend is allow us a quarter to come back to you because there’s a lot of play here on auto like I said and I am confident that the stack that we have built is there. I am also confident that this is going to come back in Fact, I said that auto should come back after a couple of quarters. That’s what I said. And mobility will come back because of TNOH and Aero. It will come back from quarter three onwards and maybe quarter two if we win the deal and the ramp up happens.
So we’re not giving it up.
Manik Taneja
Sure. All I’m saying is I want to be, I would like to, I would like to make sure that I deliver whatever I commit to you all in a call. We really appreciate your confidence in us. So a little bit of caution there please.
Amit Chadha
Sure.
Manik Taneja
Thank you. All the best for the future.
operator
Thank you. The next question is from Karan Uppal from Philip Capital India. Please go ahead.
Karan Uppal
Yeah, thanks for the opportunity. A couple of questions from my side. Firstly, Amit, on the revenue conversion. So last three quarters were pretty strong from the deal signings perspective. How are you seeing the revenue conversion? Is the revenue conversion on track or are you seeing some delay due to the macro uncertainty? And second question is on the overall pipeline so the last three quarters have been pretty strong in terms of the deal signings. So should we expect this 200 million deal in number to be a new base for LTTS? Yeah.
Amit Chadha
So Karan, thank you. So Karan, first I would like to confirm to you our aspiration is to stay at this $200 million LDTCV every quarter. And I in fact want to start inching upward. And I’ll tell you what, we have changed once we have gone to these segments, the three segments externally and seven segments internally. We kind of now have seven sales organizations in the company. So I do expect this to start bearing fruit and growing as we go forward. So that is. Members of the management. We can’t hear you. Participants, please stay connected while we reconnect the management. Participants, the line for the management has dropped. We are reconnecting them. Please stay connected. Thank you. Participants, thank you for patiently holding your line. The line for the management is reconnected over to you sir.
Amit Chadha
Yeah, I’m sorry Karan, don’t know what happened but I’ll repeat. So Karan, to answer your questions straight, the $200 million LDTCV should be considered as something that we will continue to try and deliver as you go forward. We’ve got with the segment approach we’ve got LD teams in every segment and we expect this to continue to fire. Number two in terms of pipeline, we have a robust pipeline. It’s grown quarter on quarter and year on year. Not just that order backlog. Because of this TCV closures has increased year on year for US and quarter on quarter as well.
Now in terms of execution, we are more or less on target and execution. You can see that in the sustainability growth that you are seeing. Also I would like to confirm to you that outside of Smart World, the company quarter on quarter has grown sequentially as well and that is a result of the pipeline getting converted. Like I mentioned in the automotive segment there were pauses and some delays that our clients wanted in specific cases and some program cancellations. But that is a one off from just automotive. Other than that, the rest of it is all in line and growing.
Karan Uppal
Just a follow up outside of swc, you mentioned something has grown. If you could quantify how much is the growth there.
Amit Chadha
We don’t do that, Karan, but I can confirm to you that the swing of SWC in quarter four was there. And we hope that as we go through the year and we start getting Middle east revenues, some of that will go away. But that is work to be done as we move forward into FY26 and beyond.
Karan Uppal
Okay, and last question is on the top clients, there has been a decline across top 5, top 6 to 10 and 11 to 20 client buckets. Could you clarify what happened there and what’s the outlook on top 20? See that was largely driven by the automotive decline that you saw in revenues. See if I look at it mobility, right. So see if you take the percentages out, the degrowth was what about 2 million? 1.9, 1 point something?
Amit Chadha
1.9.
Amit Chadha
Right. So 1x was the decline in mobility that we had. So if you look at it, TNOH and aero grew to make up and automotive came down. Right. So overall was kind of, I mean we want to be nice, kind of flattish, but yes, a little bit of decline. But if I look at it that has what has impacted some of these accounts. But I would not be worried about this. Kindly give us a quarter or so. You will start seeing some of this improvement. In fact, part of my commentary, I announced that we will in quarter two hit our first 50 million ARR account yet again and it will start reflecting because you are.
We report trailing 12 months to you, but we see ARR ourselves. So I would like to provide you confidence that you will see this improve. I would not be too worried about it at this stage.
Karan Uppal
Okay, thanks Amita and all the best.
Amit Chadha
Thank you sir.
operator
Thank you. Before we take the next question, a request to participants to please limit your questions to two per participant. Should you have a follow up question, we request you to rejoin the queue. The next question is from Vibor Singhal from Nuvama equities, please go ahead.
Vibhor Singhal
Yeah, hi, thanks for taking my question Amit. Just want to understand the SWC part a bit more here. As you mentioned that outside of SWC the business grew. Now we have typically see we just have two data points. I think in both years in FY25 and 26 in Q1 our revenue fell by around $10 million sequentially. Assuming that that is also attributable to SWC. I mean is this a seasonality that we’re going to continue to see going forward as well that will have basically a ramp up in Q4 and then a sharp ramp down of almost $10 billion in Q1? Or do you think this is going to come down over a period of time as we sign more deals? Just an outlook on that because I think overall our business continues to be stable but this is the one which is probably dragging the numbers down.
Amit Chadha
So Vivore, thank you so much and you’ve been a guide and a coach to us as well as we have moved through the years. So we vote number one. SWC swing this year from quarter four to quarter one was greater than $10 million and it was made up by the growth of LTTS Heritage business and is organic growth as well. Because is also came at a certain base we have had to grow is so is grew LTTS heritage grew swc, the swing was greater from quarter four to quarter one and the swing. So we’ve been able to manage it a little better.
Now had Automotive not given us a surprise, you would have seen a much smaller swing in terms of the decline. Right? So that’s a reality. Having said that, we are working hard before to stabilize this. We are very choosy in the contracts that we are bidding for in swc. We are trying to even it out by getting more work from Middle east right now. In fact, I’m going to request Abhishek, who’s our director to talk about this as well a little bit. And then there’s the other business we bore with the segmentization and more people in the large deals team, more people in the sales team and US and Europe starting to grow for us.
We believe that when you come to Q1 of FY27 the decline should be lower or not there. Our intent is not there here. ABHI if you can please add on smart world the solutions and what we are doing. So I think.
Vibhor Singhal
Yeah, thanks Amit. A couple of points. I truly believe that our growth in. The international segments, US and Middle east and the kind of Deals we are seeing there us especially in the data center side and Middle east led by platforms on Fusion and another platform that we’re building on Computer Vision. These are the kind of deals which will be more service heavy and that should reduce the swing that you’re seeing. But again, this is something that we’re working on. The pipeline is good, but till it converts, it’s not converted. So let’s hope that in the coming quarters we’re able to do much better on this. You want to talk about this vision thing?
Amit Chadha
Yeah, that’s what I was seeing, the computer vision platform they’re building. So what we have done is the last seven years of work we have done smart cities. We have more than 50 use cases of various smart city solutions. We are building a platform where we intend to have a model studio where not just our models but even customers can try out their models, their data. This is work in progress. We should be able to release the MVP shortly and from there on a sandbox where customers can play on something ambitious. And of course based on what we have uniquely achieved in the industry and this platform is what we intend to take to the market in the coming quarters.
Vibhor Singhal
Got it, Got it. Thanks for that very comprehensive answer and looking forward to a much lesser decline in F1QFY27 as you just promised. Amit, just one quick follow up for Rajiv. In fact, just two quick questions for Rajiv. So Rajiv, I think if I understand correctly, I mean SWC business has traditionally been and when we acquired it also it is a lower margin business. So shouldn’t Q1 automatically have a margin tailwind if SWC business ramps down in that quarter? I mean we didn’t see an expansion in Q1 last year and this year as well. So could you just take me through the math as to why despite lower SWC revenue, we see basically flattish margins in this quarter or nothing in let’s say a kind of a jump in margins.
Rajeev Gupta
So I think spot on Vibhoor and I think I was expecting a question like this. So really what has transpired is see SWC business, though you call to be relatively lower margin, still has an impact on the overall margin. So there is a decline on account of SWC seasonality impacting the margins. But what you’re also seeing is that strategic support that we’ve called out continues in Q1. There are other programs that Amit highlighted in terms of auto that also faced some headwinds. You had some program pauses. So there is more than what we’ve had to deal in Q1 compared to Q4.
And that’s essentially where you see that despite these headwinds through the ltts, heritage business particularly wins in sustainability and growth in sustainability segment. We’ve been able to marginally improve EBIT margins and essentially that’s where it is right now. If you really bake this out and play forward Q2, Q3, we are anticipating some of these headwinds will phase out leading to improvement in margins before. Got it. Rajiv, just one last bit. The cash flow in this quarter was quite weak. I missed your original comments. Anything to worry about or just basically a quarterly thing and some of the cash flows maybe spilled over to the next quarter.
Yeah, Vibhoor, I think it might sound a similar response actually. This is a SWC seasonality effect, right. Much like revenue, you kind of see an uptick because we’re in projects kind of business, of course, with milestones being delivered that follows through with higher cash payment. So you will see the uptick, you will see cash improving from year on. You would have seen a similar pattern in quarter one last year where we had negative cash flows, but we recovered to deliver almost 108% of free cash flow all of FY25. I mean, hoping to get there. If not 100, at least do 90% plus free cash flows.
Vibhor Singhal
Great. Thank you so much for taking my questions and wish you all the best. Thank you.
operator
Thank you. Before we take the next question, a reminder to participants to please limit your questions to two per participant. The next question is from Ravi Menon from Macquarie. Please go ahead.
Ravi Menon`
Hi. Thank you for the opportunity. Congrats on the strong last deal wins. I just wanted to check on, you. Know, the tech segment, you know, where you said that you extended some support to customers. Is this in semiconductors? Can I request, Ravi, let it leave. Leave it at tech and let us do it?
Amit Chadha
Sure.
Ravi Menon`
Just wanted to understand the dynamic here. Because it looks like, you know, there. Is a little bit more of that this quarter compared to last because QoQ. Despite SWC seasonality, you know, margins have gone down in the tech segment. So that’s why I wondered if this is, you know, like there are. It’s become a little bit more widespread. Is it more customers or a larger extent of support?
Amit Chadha
No, it’s not. Not wider customers. I’ll just. There are two specific customers and like we told you last quarter, abhi, this was a quarter four, quarter one and potentially a little bit in quarter two support that will be done and that is the end of it. And there are various other Measures being taken in the company that we are taking. And that is why Rajiv confirmed to you that from an EBIT trajectory quarter, you know, H2 will be better than H1 and it’s our goal to try and get there. There’s a lot of work being done right now and work in play.
Ravi Menon`
Thanks. As a follow up to Rajiv, once we. I’m sorry, one more thing, Ravi. Also please keep in mind that the new age solutions that we are launching, etc.
Rajeev Gupta
We are also we’ve got our robust pipeline in all three segments, you know, mobility, sustainability and tech. If some of these deals that we expecting closure on get closed quickly in the quarter earlier, before the summer holidays, it’ll help us as well. So various things being worked on.
Ravi Menon`
Thanks so much. I appreciate that. Rajiv, if once you’re passing acquisition, how. Should we think about the seasonality of margins in our business Overall considering SWC, should Q1 be the low point. Or. Q4 be the lowest for margins? How should we think about seasonality for margins? So Ravi, tempted to almost say that look, Q1 is the bottom in terms of margins. What probably we are little wary about is is there any further shocks to absorb in Q2? Having said that, I think we’ve got enough and more to be able to improve margins from here on. So you will see gradually margins improve. The reason we are calling out Q2 is because you’re still seeing some of the dynamics being played out from a macro standpoint. But we’re hoping Q2 is the last quarter and then we’ll see margins improving thereafter.
All right, thanks so much.
operator
Thank you. The next question is from Sandeep Shah from Eqirus. Please go ahead.
Sandeep Shah…
Yeah, thanks. Thanks for the opportunity. Just a clarification question. The guidance which we have given for a double digit growth in this here we are reiterating but the last time in the earnings call and the press release we have mentioned about constant currency versus this time the press release does not mention a constant currency. So is it any assumption change in terms of a full year guidance this time?
Amit Chadha
No. Okay. So one can fair to assume the guidance is based on 4QFY25 rates. Huh? 4Q if I. Yeah, absolutely. Yes sir. Okay. Okay. And directionally one can assume this growth would be more back ended rather than second quarter may pick up significantly need to be worked. I mean internal goals are much higher. You know, you say man, man proposes, God disposes, right? So to be played out, my friend. But all we’d say is that HT see, you will see Growth in revenue from here on, no second doubts about it. Now how much can we grow in Q2 and then take to Q3 and then to Q4 is to be worked.
Sandeep Shah…
Okay, okay. And Rajiv, just a clarification. This quarter we had 11.9% in terms of SGNA which I agree because of the lower revenue base. But you are saying one can model 10.5 to 11.5. So what are the extra things which we are doing beyond a growth as a lever which will decline into SGA as a cost.
Rajeev Gupta
So Sandeep, I think part of this and if you do go back few quarters we’ve been running at that 10.5 to 11% SGA clip. Right. The increase in SGNA from quarter four was largely because of IntelliSwift. Right. IntelliSwift, being a smaller company had higher levels of SGNA as part of the integration plan.
We are continuing to look at opportunities on optimizing and also efficiently managing some of the SGA cost. So what you will naturally see is that it will come in between this 10.5 to 11.5% range. And that’s the reason I’m guiding to model in that range. Okay, thanks and all the best.
operator
Thank you. The next question is from dipesh from MK Global. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity. Just two questions.
Unidentified Participant
First on the intellisuift can you provide. Let’S say how the integration playing out and the growth rate momentum playing out pipeline and other thing because when we acquired, I think we have very ambitious target to scale the business in three years. If you can provide some update on that. Second question on the clarification side. Last quarter we said organic growth to be better in FY26 compared to FY25. Are we maintaining or we think because of weakness in some of the segments that might be tough. Thanks.
Amit Chadha
Okay, Divesh, thank you. So first question on intelli that you asked. So we have a. We’ve created a three year, in fact a five year plan for intellius. And so in tele you can divide up into hyperscalers in ISV business which was 2/3 of the business and or half of the business. Half of the business and half of the business is in retail, fintech, non banking institutions which includes private equity and providers and pet care. Right. So that’s the area that they play in or we play in with Intelli. Now we’re doing two or three things early immediately what we have done is we have taken the hyperscalers, combined it with our hyperscalers and going full hog at that.
And we have actually now launched about 40 AI agents and about six agentic AI tools that can be leveraged for hyperscalers. In the other three sub segments which is retail, fintech, non banking which includes hyperscaler, which includes private equity and in providers and pet care. We have engaged with doing a strategic plan or how can we make each of these three sub segments to $100 million each in six years. And that is in play right now. We remain comfortable and confident. Right. That the growth will be there and is there right now with a pipeline.
Right. So that is number one. Number two, your question on FY26. I am reiterating two statements. Number one is that we will have double digit growth. Number two, we continue to work on making sure FY26 will be a better year than FY25. Sustainability is already helping us to deliver that. We are choosing where else do we get the other stuff to be able to deliver but here to be played out, my friend.
Unidentified Participant
Thank you.
operator
Thank you. The next question is from Rahul Jain from Dolat Capital. Please go ahead. Yeah, hi.
Rahul Jain
Thanks. Opportunity. Just clarification in the quarter.
Amit Chadha
Mr. Chair, your voice is breaking. We can’t hear you very clearly.
Rahul Jain
Yeah. Is this any better?
Amit Chadha
No.
Rahul Jain
Hello.
operator
Yes, much better. Please go ahead.
Rahul Jain
Yeah. So my question was we saw good new client addition in quarter. Is it led by Intelliswift or. And if yes then what is the contribution of this unit in the quarter?
Amit Chadha
No, the new client edition that we have had is and part the new clients that we added into intelli must have been added in quarter four. Right. So this is new client edition. In addition there have been teams that have been working hard. My friend, this is across the board. And this must be smaller deals because larger deal cumulatively accounts for the bulk of that. Are these coming as a smaller deal versus what we used to prune the accounts earlier versus now scaling some smaller size accounts. So I heard you. Rahul. Are you asking are we going after smaller accounts as opposed to larger accounts? Just give me a minute. Let me look at the report. Exactly what you are referring to. Just give me a second please. So Rahul. I think I got what you are referring to, sir. Rahul, if I look at it our quarter one FY26 has 200 clients that are million dollar plus. Last quarter was 194 and one year ago was 177. See this 194 is the new base with IntelliSwift. So from there we have added six more into quarter one.
That are million dollar plus. Rahul, if you look at it, some of these accounts will move up, right. So there will be addition that we’ll see. We look at. There are, there is. There are specific clients that we are wanting to acquire that we will acquire because we have a must have logos need to have logos list that we have got. Plus existing clients will grow. So both will happen. I also want to confirm to you our whole strategy of wanting accounts that are million dollar plus. In fact we try and say that if a client is not a million dollar client annually for us in about four to six quarters we don’t want to be able to continue unless we are working on a specific technology area because it is not a viable thing for us to do.
So it’s a stated policy within the company respectfully to clients as well. So that has not changed out.
Rahul Jain
Yeah. So Amit, why I was connecting the two because the net active client addition is 38 versus you know it was very static you know prior to this transaction. So that’s why I was just thinking that most of it might have come in the nature of this business.
Amit Chadha
No Rahul, in fact I would like to confirm to you that 194 is including Intel E. So the jump between 177 and 194 which is because of Intelli. Correct. And the 194 to 200 is there. Now you must be also referring to total number of active clients that is from 421 to 459. See because there are seven sales teams in the company now rather than one unified sales team. So there will be more action that you will see. And as you see the pyramid will grow up and our whole goal is to go deeper to scale build larger relationships and so you will see more progress.
And just one last bit on the aspiration of Q4. 27 I know there is some time for that given the way macro are shaping this very strong deal win that you are having. We are not seeing the revenue so wouldn’t be prudent to you know have a different timeline for that goal or you think it is the growth in the subsequent year could be much better and that’s why it’s fair to stay with that number. So Rahul, I think good point. I mean we still would like to stay with that timeline like I mentioned earlier.
I think you know there are parts to this timeline. One of course is the IntelliSwift integration which is indeed panning out well which of course gives us the comfort. The second like we talked about we are seeing a lot of large deal wins in sustainability segment. Right. So along with plant engineering, we are seeing a turnaround in industrial products also. Which gives us the comfort, we believe that some of the strategic support is more short term. Right. If I were to call out and beyond Q1, Q2, it should phase out. So we will continue to hold the timeline.
If there is any, let’s say worsening of the global environment then we will call it out. At this stage, the basis remains the current global environment. Right.
Rahul Jain
Right. Thanks for the color and congrats on winning consistently strong deals despite this kind of environment. Thank you. Thank you, Rahul.
operator
Thank you very much. That was the last question in queue. I would now like to hand the conference over to Mr. Sandesh Nair for any closing comments.
Amit Chadha
Thank you, Rahu. Thank you everybody for joining us at this late hour in the evening. And if there are any of the. Questions which remain to be answered, we will connect offline. Thank you and take care everybody. Thank you.
operator
Thank you very much. On behalf of LNT Technology Services limited that concludes the conference. Thank you for joining us. Ladies and gentlemen. You may now disconnect your lines.