In a dynamic global economy marked by uncertainty, HCLTech has once again showcased its resilience and strategic prowess with its Q4 FY25 earnings announcement. The company delivered robust financial performance, approved a generous dividend of ₹18 per share, and highlighted its leadership in AI and generative AI (GenAI) innovations. This article dives deep into HCLTech’s Q4 2025 scorecard, decoding the numbers, exploring the management’s insights, and analyzing the company’s outlook for FY26. With a focus on sustainable growth, client-centric strategies, and cutting-edge technology, HCLTech continues to set benchmarks in the IT services industry.
HCLTech Q4 2025: A Snapshot of Financial Resilience
HCLTech’s Q4 FY25 results reflect its ability to navigate challenges while maintaining steady profitability. Despite seasonal fluctuations in its software business, the company achieved a year-on-year revenue growth of 2.9% in constant currency, with total consolidated revenue for FY25 reaching $13.84 billion, up 4.7% from FY24. The operating margin stood at 18.3%, a slight improvement of seven basis points over the previous fiscal year, underscoring HCLTech’s disciplined cost management and operational efficiency.
The board’s approval of an interim dividend of ₹18 per share for FY25-26, marking the 92nd consecutive quarter of dividend payouts, reaffirms the company’s commitment to delivering shareholder value. This dividend includes a special component to celebrate 25 years of HCLTech’s public listing, highlighting its legacy as a global technology leader.
Key Financial Highlights
- Revenue Growth: FY25 consolidated revenue reached $13.84 billion, up 4.7% year-on-year in constant currency.
- Q4 Performance: Revenue grew 2.9% year-on-year but declined 8% sequentially due to seasonality in the software business.
- Operating Margin: FY25 margin improved to 18.3%, with Q4 at 17.9%.
- Dividend: Interim dividend of ₹18 per share approved, with a record date of April 28, 2025, and payment date of May 6, 2025.
Services Business: Outpacing Peers for Three Consecutive Years
HCLTech’s services business has been a cornerstone of its success, achieving a 4.8% growth in FY25 and outpacing similar-sized peers for the third consecutive year. This segment includes IT and business services, which grew 4.6%, and engineering and R&D (ER&D) services, which recorded an impressive 5.5% growth. The services business also saw a strong 7% sequential growth in Q4, driven by robust demand across key verticals and geographies.
The company’s ability to deliver consistent growth in its services portfolio is a testament to its client-centric approach and diversified offerings. By focusing on high-growth areas such as AI, cloud, and digital engineering, HCLTech has positioned itself as a trusted partner for enterprises worldwide.
Breakdown of Services Growth
- IT and Business Services: Grew 4.6% in FY25, driven by demand for digital transformation and cloud services.
- Engineering and R&D: Achieved 5.5% growth, with a record 75% increase in bookings, reflecting strong traction in AI-powered and software-defined solutions.
- Q4 Services Growth: 7% sequential growth and 2.7% year-on-year, showcasing resilience despite macroeconomic challenges.
HCL Software: A Rising Star in the Portfolio
HCLTech’s software business, HCL Software, delivered a commendable 3.5% growth in FY25, with its annual recurring revenue (ARR) reaching $1.03 billion. This marks an acceleration from FY24, driven by the increasing relevance of HCL Software’s products in the digital economy. In Q4, the software business grew 2.9% year-on-year, despite seasonal headwinds, highlighting its ability to adapt to market dynamics.
HCL Software’s focus on integrating AI and GenAI into its offerings has enhanced its value proposition, enabling clients to achieve greater efficiency and innovation. The company’s strategic investments in agentic capabilities and industry-focused solutions have further strengthened its position in the competitive software market.
HCL Software Highlights
- Annual Recurring Revenue: Reached $1.03 billion in FY25, up 3.5% from FY24.
- Q4 Growth: 2.9% year-on-year, despite seasonal challenges.
- AI Integration: Adoption of AI and GenAI across products, driving higher wallet share with existing clients.
Geographic and Vertical Performance: A Balanced Growth Story
HCLTech’s diversified portfolio across geographies and verticals has been a key driver of its FY25 performance. The Americas, the largest IT services market, led with a 5.3% growth, followed by the Rest of the World at 4.7% and Europe at 3.5%. This balanced growth underscores HCLTech’s ability to capitalize on opportunities across global markets.
In terms of verticals, telecom, media, publishing, and entertainment led with an exceptional 43.4% growth in FY25, driven by demand for digital and connectivity solutions. Retail and consumer packaged goods (CPG) followed with a 10.7% increase, while technology and services grew 6.7%. To further tap into the growing public sector market, HCLTech established HCLTech Public Sector Solutions, a subsidiary dedicated to serving state, local, and federal clients in the U.S.
Geographic Growth
- Americas: 5.3% growth, fueled by demand for AI and digital transformation solutions.
- Rest of the World: 4.7% growth, reflecting HCLTech’s expanding global footprint.
- Europe: 3.5% growth, driven by strong deal wins and pipeline growth.
Vertical Performance
- Telecom, Media, Publishing, and Entertainment: 43.4% growth, driven by digital and connectivity solutions.
- Retail and CPG: 10.7% growth, reflecting consumer demand for personalized experiences.
- Technology and Services: 6.7% growth, supported by cloud and AI adoption.
Bookings and Pipeline: A Strong Foundation for Future Growth
HCLTech’s Q4 FY25 bookings reached $3 billion, marking the second-highest quarterly booking after the mega-deal-driven September 2023 quarter. For the full year, total new bookings stood at $9.4 billion, balanced across service lines, geographies, and verticals. The ER&D services business led with a remarkable 75% growth in bookings, driven by mega deals in AI-powered silicon and software-defined vehicle segments.
The company’s pipeline remains near an all-time high, supported by strong deal conversions and growing demand for AI and GenAI solutions. Both the Americas and Europe reported significant pipeline growth, positioning HCLTech for sustained momentum in FY26.
Booking Highlights
- Q4 Bookings: $3 billion, the second-highest quarterly booking.
- FY25 Bookings: $9.4 billion, balanced across service lines and geographies.
- ER&D Leadership: 75% growth in bookings, driven by AI and software-defined solutions.
Pipeline Strength
- Near All-Time High: Supported by multiple deals across IT, ER&D, and software businesses.
- AI and GenAI Focus: Integral components of nearly every deal, driving pipeline growth.
- Geographic Momentum: Strong pipeline growth in the Americas and Europe.
AI and GenAI: Powering Innovation and Efficiency
HCLTech’s strategic investments in AI and GenAI have positioned it as a leader in driving digital transformation for clients. The company’s four flagship AI offerings—AI Force, AI Foundry, AI Labs, and AI Engineering—have seen significant adoption in FY25, with AI Labs delivering 500 AI/GenAI engagements for 400 clients. These offerings enable clients to enhance efficiency, innovate, and stay competitive in a rapidly evolving market.
Internally, HCLTech has leveraged AI to optimize processes and drive productivity gains, which are shared with clients to strengthen partnerships. The company’s focus on agentic capabilities and industry-focused solutions has further enhanced its AI portfolio, making it a key differentiator in deal wins.
AI and GenAI Highlights
- Flagship Offerings: AI Force, AI Foundry, AI Labs, and AI Engineering drive client adoption.
- Client Engagements: 500 AI/GenAI engagements delivered for 400 clients.
- Internal Optimization: AI-driven productivity gains shared with clients, boosting wallet share.
- Industry Recognition: Named the world’s fastest-growing IT services brand in 2025 by Brand Finance, with a 17% increase in brand value to $8.9 billion.
Dividend Strategy: Rewarding Shareholders Consistently
HCLTech’s approval of an ₹18 per share interim dividend for FY25-26 reflects its commitment to shareholder value. This dividend, which includes a special component to mark 25 years of public listing, is part of the company’s 92nd consecutive quarterly payout. The record date for the dividend is April 28, 2025, with payment scheduled for May 6, 2025.
The company’s strong cash generation, with operating cash flow (OCF) at 143% of net income and free cash flow (FCF) at 136% in FY24, supports its ability to maintain a high dividend payout ratio. HCLTech’s dividend yield of 3.65% makes it an attractive investment for income-focused investors.
Dividend Details
- Interim Dividend: ₹18 per share, including a special dividend to celebrate 25 years of public listing.
- Record Date: April 28, 2025.
- Payment Date: May 6, 2025.
- Dividend Yield: 3.65%, with a payout ratio of 87.4%.
Outlook for FY26: Navigating Challenges, Seizing Opportunities
Looking ahead to FY26, HCLTech remains cautiously optimistic despite geopolitical and macroeconomic challenges. The company has set a revenue growth guidance of 2-5% year-on-year in constant currency, with an EBIT margin guidance of 18-19%. While discretionary spending is expected to remain subdued, HCLTech anticipates strong growth opportunities driven by AI adoption and enterprise demand for digital transformation.
Geopolitical factors, such as tariffs and deglobalization, may impact IT services in the near term, but HCLTech’s diversified portfolio and focus on AI-driven solutions position it to capitalize on emerging opportunities. The company’s robust pipeline, strong bookings, and leadership in AI and GenAI provide a solid foundation for sustained growth.
FY26 Guidance
- Revenue Growth: 2-5% year-on-year in constant currency.
- EBIT Margin: 18-19%, reflecting disciplined cost management.
- Key Focus Areas: AI adoption, digital transformation, and public sector solutions.
HCLTech’s Competitive Edge: Innovation, Ethics, and Sustainability
HCLTech’s success in FY25 is not just about financial performance but also its commitment to innovation, ethics, and sustainability. The company was recognized as one of the world’s most ethical companies by Ethisphere for the second consecutive year in 2025, reflecting its adherence to high governance standards. Additionally, HCLTech’s focus on sustainable growth, as highlighted in its 2023-24 Annual Report, underscores its role as a responsible corporate citizen.
With a workforce of over 220,000 professionals across 60 countries, HCLTech continues to invest in talent development and specialized skills, particularly in AI and data. The company’s market capitalization of over ₹5 lakh crore makes it the third-largest IT company in India, a testament to its enduring legacy and market leadership.
Competitive Strengths
- Innovation Leadership: Investments in AI, GenAI, and digital engineering drive client value.
- Ethical Governance: Recognized as one of the world’s most ethical companies in 2025.
- Sustainability Focus: Commitment to sustainable growth and responsible business practices.
- Global Reach: Over 220,000 professionals across 60 countries, serving diverse industries.
Conclusion: HCLTech’s Path to Sustained Leadership
HCLTech’s Q4 FY25 results demonstrate its ability to deliver resilient growth, maintain profitability, and reward shareholders in a challenging global environment. With a strong focus on AI and GenAI, a diversified portfolio, and a robust pipeline, the company is well-positioned to navigate short-term uncertainties and capitalize on long-term opportunities. The approval of an ₹18 per share dividend further reinforces HCLTech’s commitment to creating value for its stakeholders.
As enterprises accelerate AI adoption and digital transformation, HCLTech’s innovative solutions, client-centric approach, and global delivery model will continue to drive its leadership in the IT services industry. Investors and stakeholders can look forward to a promising FY26, with HCLTech poised to deliver sustainable growth and industry-leading performance.