Puneet Jain: Got it. Thank you.
Operator: And thank you. And one moment for our next question. And our next question comes from Moshe Katri from Wedbush. Your line is now open.
Moshe Katri: Hey thanks for taking my call. Good numbers. In your opening remarks, you spoke about sales pipeline strength with expanding average deal sizes. In the context, can you talk a bit about maybe TCV, ACV, how is that kind of moving? Is there any way to kind of quantify those movements? And then any — have there been any changes in the pace of sales cycles or pipeline conversion rates? Thanks.
Rohit Kapoor: Sure. So Moshe, our sales pipeline continues to remain strong, both across digital operations and our data analytics business. I think from a TCV standpoint, we are seeing larger deals come in. So the TCVs are certainly higher. And the way we would characterize this is 70% of our pipeline is made up of large deals. We also — and the conversion between a TCV and an ACV, that remains pretty much constant. Typically, our digital operations deals are between 3 to 5 years in terms and the analytics deals are typically 1 to 2 years in term. So that ratio remains pretty much the same. As far as the win rates are concerned, we’ve been fortunate that we’ve been winning at a healthy rate over the last few quarters, and that’s what is giving us an elevated rate of growth in our digital operations business.
Clearly, we need to have a lot more in our analytics business, because the discretionary spend out there is somewhat curtailed and that decision-making on discretionary projects is still suppressed and being held back. So as soon as that kind of comes back to normalcy, we would see that go up. I think what we are seeing is that the banking and financial services sector seems to have stabilized. So that’s a good sign for us because that’s a large part of our business. And we would expect that as that stabilizes and returns back to growth, we would be able to benefit from that.
Moshe Katri: And then just a follow-up on the marketing analytics piece. Obviously, we’re looking for a decline year-over-year this year. Is there a way to kind of quantify that decline in terms of expectations? And then maybe in general, what drives this segment? Maybe talk a bit about what funds it? How do clients fund it? And what are kind of the reasons to kind to contract EXL for these kind of services? Thanks.
Rohit Kapoor: Sure. So Moshe, we don’t quantify this service line for us because it’s a small service line. But I think the way to think about this is, our marketing analytics business is largely focused in with insurance carriers trying to acquire new customers and by banks and financial institutions trying to acquire new borrowers. Clearly, with the interest rates going up, the acquisition spend by banks and financial institutions in terms of acquiring new borrowers, that propensity has declined. And with the insurance carriers, given some of the inflationary pressures that were there, their outreach to acquire new customers has also declined. And that’s the reason why the marketing analytics business for us has declined sequentially.
Now, what we are doing with our marketing analytics business is 2 fundamental changes. Number one, we are diversifying our customer base. So actually, we are broadening out our customer base. And now we have clients from health care, we have clients from our emerging business unit and other clients that are taking advantage of the proprietary data assets that we have in marketing analytics and being able to benefit from that in terms of the next best thing to sell to their customers and their ability to cross-sell. So that diversification is helping. And we are expanding the work that we do in marketing analytics from just customer acquisition to much more of an end-to-end customer engagement profile. So that’s been helpful as well. And obviously, it’s going to take us some time to do this, but the diversification of marketing analytics across industry verticals and customers as well as the broadening out of that service line in marketing analytics is going to help us manage the volatility of this business.
Moshe Katri: Understood. Thanks.
Operator: And thank you. And one moment for our next question. And our next question comes from Dave Koning from Baird. Your line is now open.
David Koning: Yes, hey guys thanks. And yes, great results. On health analytics, like if we just take total health less your health operations, that business line has been remarkably strong and stable. I think I look back for like eight quarters or so, it’s been growing kind of 25% to 36% each quarter. What’s so consistent about that? I mean it seems like it’s not having any impact from kind of the macro slowdown?
Rohit Kapoor: Yes, Dave, thanks for that. As you know, the health care industry vertical is actually a huge vertical. And number two, it’s got huge challenges with data. And as payers and providers and participants in the health care services business start to embrace a lot more of data and start to embrace a lot more of AI, we are certainly benefiting with that. Our health care payment services has been growing very, very nicely. But the reason it is growing very nicely is because our ability to leverage data, to leverage AI and to leverage digital, alongside with our strong understanding of the payment services process allows us to be able to deliver superior impact for our clients and our clients love that, and they are embracing more and more of that.
We’re also seeing a lot of growth take place in health care analytics. And this is a huge opportunity for us to continue to build upon, because leveraging data in health care analytics can be very, very impactful for all of the major participants in this industry space. So we are very pleased with what we have built out here, the kind of impact we are creating and the kind of traction that we’re getting. But I can tell you our penetration in this vertical is still very small because the health care business by itself is a $4 trillion business vertical.
David Koning: Got you. Yes. No, that’s helpful. And then if I might ask just a super nerdy question on the cash flow statement. You mentioned in the prepared remarks about the contingent consideration payment. It was split both between the operations and the financing. I’ve never seen it in operations before. Maybe I think $11 million was in operations and $4 million of the payment was in financing. Why was that?
Maurizio Nicolelli: So we’re following acquisition accounting, Dave, and that’s the recommendation that we have from our orders that we’ve worked very closely with and so that’s where we ended up on. Look, we had an outflow because of that during the quarter. But when you look at free cash flow for the year, we still expect it to be comparable to net income for the year. So we had a — we had this 1 blip in Q1, but we do see the full year being — free cash flow being comparable to net income.
