Detailed Summary

Financial Performance Overview

Q2 FY27 Performance:

  • Revenue from operations stood at ₹271 crore, representing a 51% year-on-year (YoY) growth (43% on a constant currency basis).
  • Adjusted EBITDA was ₹44.8 crore, more than doubling from the same period last year. The adjusted EBITDA margin was 17%.
  • Profit After Tax (PAT) was ₹22 crore, which is 8% of the top line.

H1 FY27 Performance:

  • Revenue stood at ₹528 crore, a 47% YoY growth (38% on a constant currency basis).
  • Adjusted EBITDA was ₹89 crore, at a 17% margin.
  • PAT was ₹12.4 crore, a 2% margin.

Growth Levers and Business Metrics

Organic vs. Inorganic Growth:

The 47% H1 revenue growth is broken down into:

  • Organic business growth: 23% (from ₹257 crore in H1 FY26 to ₹318 crore in H1 FY27).
  • Inorganic business growth: More than doubled (from ₹101 crore in H1 FY26 to ₹210 crore in H1 FY27), largely due to the Session M acquisition.

Annual Recurring Revenue (ARR):

ARR saw significant growth:

  • Q2 FY26: ₹717 crore
  • FY26: ₹765 crore
  • Q2 FY27: ₹1,085 crore (a 51% YoY increase)

This growth is attributed to the Session M acquisition, Net Retention Rate (NRR), and new Annual Contract Value (ACV).

New Annual Contract Value (ACV):

Trailing 12-month new ACV showed strong growth:

  • Q2 FY26: ₹52 crore
  • Q2 FY27: ₹93 crore (a 79% YoY increase on a constant currency basis)

Management attributed this growth to the company's AI capabilities (aiRA) differentiating it from competitors.

Net Retention Rate (NRR):

The organic NRR for Q2 was 116% (109% on a constant currency basis). The expansion is driven by three factors: increased platform usage leading to overage charges, product upgrades/service upsells (e.g., aiRA, Experiences Plus), and expansion into new geographies/brands by multinational clients.

Profitability and Margins

Gross Margin:

The company maintained a stable gross margin of 67% in H1. This is despite the addition of Session M revenue, which operates at a lower gross margin (approximately 51-52%). The core Capillary platform maintains gross margins above 70%.

Margin Expansion Drivers:

The improvement from ₹41 crore adjusted EBITDA in H1 FY26 to ₹89 crore in H1 FY27 is attributed to:

  • NRR expansion.
  • Operating leverage on non-COGS costs (which grew at 34% vs. 47% revenue growth).
  • Margin uplift from migrated acquired customers.

For every ₹100 of new organic revenue, ₹44 is generated in adjusted EBITDA due to this operating leverage.

Acquisition Update: Session M

  • Acquired in Q1 FY27, Session M has been break-even for both Q1 and Q2.
  • The platform currently has a run rate of approximately $30 million (₹300 crore annually).
  • A key focus is reducing its high server costs (currently ~50% of revenue vs. Capillary's 8-10%). Projects are underway to migrate from Windows to Linux servers and improve utilization, targeting a 50% reduction in these costs by March/April 2027.
  • The migration of its ~40 customers to the Capillary platform is expected to be a 2-3 year process, which will further improve its margins to Capillary's levels.

Product Update: aiRA

  • aiRA is the company's AI-powered analytics and campaign management agent.
  • Its capabilities have been extended to include acquisition channels like Google Ads, Meta, and TikTok, providing a single view of marketing performance.
  • It is also being sold as a standalone product that can sit on top of other data platforms like Databricks or Snowflake.
  • The average deal size is $100k-$200k, and it represents roughly 10% of the value in new deals, often being the key differentiator that wins the entire contract.
  • The company has an $8-9 million pipeline for aiRA and is targeting a $10 million ARR run rate, potentially with a one-quarter delay due to pricing model tweaks (shifting to fixed-fee Team/Professional licenses).

Cash Flow and Balance Sheet

  • The company ended the quarter with a strong cash balance of ₹573 crore.
  • Borrowings are ₹45 crore,全部 classified as short-term working capital debt with zero long-term debt.
  • Net cash generated from operating activities for H1 was ₹113 crore.
  • Operating Cash Flow to Adjusted EBITDA stood at 128%.
  • Free Cash Flow to PAT was 506%.
  • Return on Capital Employed (ROCE) improved to 7% from 5% last quarter.
  • Cash Return on Invested Capital improved to 29% from 22% last quarter.

Capital Allocation and Guidance

  • The company maintains an active M&A team and is looking for further acquisitions that offer a 4-5 year payback, typically at valuations not exceeding 1x revenue.
  • Management reiterated confidence in hitting or slightly exceeding the full-year guidance provided at the start of the year, citing good momentum.