Financial Performance Overview

Q2 FY27 Results:

  • Reported 2% sequential growth in USD terms (2.5% growth in INR terms)
  • Growth was broad-based across verticals with particular strength in Financial Services and Industrials

Vertical Performance Breakdown:

  • Financial Services: Grew 3.5% sequentially, with strong performance in wealth management and asset management business. Three out of ten wins this quarter were in asset/wealth management.
  • Industrials: Grew 21.4% sequentially, driven by automotive and auto component manufacturers. One large logo is poised to exceed $4 million annually, while another auto component logo is expected to surpass $1 million.
  • CPG & Retail: Grew 2.7% sequentially, with retail showing strong growth momentum. Added new logos including an apparel manufacturer.
  • Technology: Faced headwinds due to consolidation and budgetary cuts, particularly affecting video streaming and gaming businesses. Management believes this vertical is at the bottom of consolidation cycle.

Profitability Metrics:

  • Gross margins declined by approximately 2% sequentially due to:
  • Wage corrections of 8-10% in India and 4-5% in US for L4 and above employees effective July 1
  • Utilization decreased to 84% from 85% in Q1 due to bench carried for delayed project starts
  • Redeployment of AI engineers and Databricks talent from COE to active engagements
  • PAT margins benefited from one-time deferred tax benefit related to ESOPs
  • Company will stop reporting adjusted EBITDA going forward (last reported due to $0.8 million forex fluctuation on Decision Point retention bonuses)

Full Year FY27 Guidance

  • Revenue Guidance: $127 million (6% YoY growth from $119.5 million in FY26)
  • Vertical Outlook:
  • Financial Services: 45-46% YoY growth
  • Industrials: 60-65% YoY growth
  • CPG & Retail: Flattish YoY
  • Technology: Approximately -5% YoY growth
  • EBITDA Margin Target: 21-22% for full year
  • Effective Tax Rate: Expected to remain in 26-28% range

Strategic Initiatives & Business Updates

Growth Strategy:

  • Target to reach $200 million revenue by calendar year 2028 (extended from previous FY28 target)
  • Three growth levers: deepening existing customer relationships, broadening cross-sell opportunities, and rebalancing across industries
  • Focus on multi-year programs to reduce customer concentration

Geographic Expansion:

  • Europe identified as key growth market with focus on automotive, CPG, and retail verticals
  • Deliberate approach targeting shorter sales cycle industries initially

AI & Technology Focus:

  • AI continues to be important growth lever, scaling across business with efficiency improvements
  • Key differentiator in helping customers with data foundation work for AI readiness
  • Portfolio of accelerators including MigrateMate, ObserveMate, and ContextMate showing traction
  • Won industry awards including Innovative Practice Best Industry Application and Best AI Solution Showcase

New Leadership Structure:

  • Creating Chief Technology and AI Officer (CTAIO) role - in advanced discussion stages
  • CTAIO will focus on unified IP development, AI products, partnerships, and capability building
  • Function will include four areas: offerings development, new solutions/accelerators, AI studio innovation, and AI DNA development

Key Client Wins in Q2:

1. Leading apparel manufacturer: Won agentic AI project with parent organization post-acquisition

2. Top financial services company: Enterprise data observability program won against large SI using ObserveMate accelerator

3. Large global tech company: Finance controllership project for legacy code migration, achieving 95% migration time reduction and 9.5/10 transformation accuracy

Partnership Updates:

  • Databricks: $30 million+ influence revenue expected for FY27 (up from $17 million)
  • Anthropic: 153 employees certified on Claude solutions
  • Strengthening ecosystem partnerships including Snowflake and industry-specific partnerships

Talent & Recognition:

  • Received best firm certification for data engineers and AI engineers
  • Databricks Service Partners 2026 award in leadership quadrant
  • Individual recognitions including Women in Digital Awards and 40 Under 40 AI Builders

Operational Metrics

  • Utilization: 84% in Q2 (down from 85% in Q1)
  • Deal Activity: 11 deals in Q2, higher than typical 5-7 quarterly average
  • Pipeline: Marginal uptick in overall pipeline with advanced stage conversations

Future Outlook

  • Q3 FY27: Expected 3-4% sequential growth based on signed business
  • Investor Day: Planned for first week of February 2027 to detail $200 million growth plan
  • Renewal Season: Key technology account renewals in November-January period
  • Inorganic Growth: Active conversations ongoing, potential additions to organic guidance

Capital Allocation

  • Balance sheet strength with significant cash generation
  • Incentive structure review underway for implementation in Q1 FY28
  • Focus on investments in sales, go-to-market, and geographic expansion