Combining AI and Equity Market

Yesterday I had developed an an code which has combined the power of Gemini and My little knowledge about the market.
As of Now I am able to analysis the concalls only of any company.
For this analysis i have taken 5 questions which are listed below.
q1 = “What is the name of the company which is organising the concall”

q2 = “If the revenew of the company is incresing or decreasing and why”

q3 = “What is the tone of the management, though out the concall and justify your answer, if management have multiple tones through out the concall, state each one of them, also justify your answer.”

q4 = “If there is anything being talked about future then please sort them out and summarize them, without loosing any bit of information.”

q5 = “What are the different challenges or opportunity that the company is expecting in near or long term.”.

Now i am writing this post expecting from the community, to help me find better generalized questions which could be found from a normal concall.

Initially i have tested this for Q4 Concall of HCL Technology.
The results are amazing.

The Results:

1st Answer – The company organizing the concall is HCL Technologies Limited.
2nd Answer – HCL Technologies’ revenue is increasing, but at a slower rate than in the previous fiscal year.

Reasons for increase:

• Momentum in Services and Software businesses.
• Strong deal wins, including a significant deal with Verizon.
• Growth in key verticals like Financial Services and Manufacturing.

Reasons for slower growth:

• Reduced discretionary spending by clients.
• Offshoring impact of a large financial services deal, leading to lower revenue recognition in the first quarter.
• Divestment of the DPO JV with State Street, impacting revenue starting in the second quarter.
  3rd Answer – The management of HCL Technologies displays a mix of tones throughout the concall, primarily:

1. Confident and Optimistic: This is the dominant tone, particularly when discussing their performance in FY24, their differentiated portfolio, new deal wins, and the potential of emerging technologies like GenAI. They highlight their industry-leading growth, strong bookings, and successful integration of IT and Engineering services.

• Justification: Phrases like “strong growth,” “fastest growth in the industry,” “healthy pipeline,” “significant strategic progress,” “confident to deliver,” and “optimistic about our differentiated portfolio” all point towards a confident and optimistic outlook.

2. Cautious and Realistic: While optimistic, the management acknowledges the challenging macroeconomic environment and its impact on discretionary spending. They are cautious about predicting a rapid rebound in discretionary spending and have factored in a similar trend for FY25.

• Justification: The repeated emphasis on “reduced discretionary spend,” “cautious optimism,” “consolidation both on the demand and supply side,” and “assuming the environment would be the same” reflects their cautious and realistic approach.

3. Transparent and Explanatory: The management is transparent in explaining their FY25 guidance, especially the reasons for the projected lower growth rate. They patiently address the analysts’ concerns and provide detailed explanations for the anticipated revenue decline in the first two quarters.

• Justification: The detailed breakdown of the guidance, including the impact of offshoring, the State Street divestment, and the usual productivity pass back, demonstrates their commitment to transparency. Phrases like “let me explain our guidance with some more details,” “to be honest, I would rather tell you upfront,” and “we wanted to explain that in detail” further emphasize this transparency.

4. Slightly Defensive: At times, the management becomes slightly defensive when analysts repeatedly question the lower guidance, particularly regarding the impact of offshoring. They reiterate that it’s a standard accounting practice and emphasize their strong track record of delivering on guidance.

• Justification: Phrases like “you cannot really strip out my largest deal and start looking at numbers that way,” “it is not the end of the world, come on,” and “the only reason we mention that is to explain the guidance” hint at a slightly defensive tone when their guidance is challenged.

Overall, the management projects a positive outlook for HCL Technologies while acknowledging the current market realities. They are confident in their strategy and execution capabilities but remain cautious about the external environment. Their transparency and willingness to address analysts’ concerns contribute to a sense of trust and credibility.

4th Answer – HCL Technologies’ management outlined several key points regarding their future outlook:

FY25 Guidance:

• Revenue Growth: Projected at 3% to 5% in constant currency. This is lower than FY24 growth due to anticipated revenue decline in the first two quarters, primarily from offshoring impact in a large financial services deal and the divestment of the DPO JV with State Street. The second half of the year is expected to be stronger, driven by new deal wins.
• Operating Margin: Expected to remain in the 18% to 19% range, consistent with FY24.
• CQGR (Constant Currency Growth Rate): Beyond Q1, CQGR is estimated to be in the range of 1% to 2.5%.

Strategic Focus:

• GenAI: HCL sees significant opportunities in leveraging GenAI for software development efficiency and business use cases. They are investing in training and building capabilities to capitalize on this emerging technology.
• Integrated IT and Engineering Services: The company believes its integrated go-to-market structure for IT and Engineering services will drive new deal momentum and capture a greater share of client spending.
• Software Business: HCL is focused on growing its software business by focusing on subscription and support revenue, steadily increasing annual recurring revenue, and converting perpetual licenses to term licenses.

Market Trends:

• Discretionary Spending: While discretionary spending is yet to rebound, HCL expects a similar pattern of reduced spending in FY25 as seen in FY24.
• AI and Emerging Technologies: Clients are expected to invest in AI and other emerging technologies to drive productivity, resilience, and business growth.
• Vendor Consolidation: HCL anticipates vendor consolidation in the market, which will benefit providers who can scale and deliver high-quality services.

Long-Term Outlook:

• HCL remains optimistic about its long-term growth prospects, driven by its differentiated portfolio, strong leadership position, and focus on emerging technologies. They expect to continue gaining market share and mindshare in the G2000 category.

Overall, HCL Technologies is cautiously optimistic about the future, acknowledging the challenging macroeconomic environment while highlighting their strategic initiatives and growth opportunities.

5th Answer – HCL Technologies identifies several challenges and opportunities in the near and long term:

Challenges:

• Reduced Discretionary Spending: The ongoing macroeconomic uncertainty has led to reduced discretionary IT spending by clients, impacting HCL’s revenue growth. This trend is expected to continue in FY25.
• Offshoring Impact: The shift of work from onsite to offshore locations in large deals, while beneficial in the long run, leads to lower revenue recognition in the initial phases due to accounting standards. This is a factor in the projected revenue decline in Q1 FY25.
• Software Price Inflation: Rising software costs are putting pressure on clients’ IT budgets, forcing them to seek efficiencies elsewhere, potentially impacting service spending.

Opportunities:

• GenAI: HCL sees GenAI as a significant growth driver, both for improving software development efficiency and for developing new business use cases. They are investing in building expertise and capabilities to capitalize on this emerging technology.
• Integrated IT and Engineering Services: HCL’s integrated go-to-market approach for IT and Engineering services is expected to create unique offerings and drive new deal momentum, capturing a larger share of client spending.
• Vendor Consolidation: The trend of vendor consolidation presents an opportunity for HCL to gain market share by demonstrating its ability to scale and deliver high-quality services.
• Growth in Key Verticals: HCL expects continued growth in key verticals like Financial Services and Manufacturing, driven by strong demand for digital transformation and R&D services.
• Tech Vertical Rebound: After a challenging year, HCL anticipates a rebound in the Tech vertical as large tech companies increase their investments in R&D.

Overall, HCL Technologies recognizes the challenges posed by the current economic climate but remains optimistic about its ability to leverage emerging technologies, strategic initiatives, and growth opportunities to achieve sustained success.