CapitalNumbers — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

CapitalNumbers reported a solid H1 FY26 with revenue growing 14.5% YoY to INR59.12 crores, driven by strategic investments in capacity, technology, and global sales. Despite margin compression due to this investment phase, the company reaffirmed its FY26 revenue growth guidance of at least 15% and declared a 10% interim dividend, underscoring management's confidence and commitment to shareholder value. The M&A strategy is progressing cautiously, and new client wins in key markets are validating the investment approach.

Highlights

  • Total revenue stood at INR59.12 crores, representing a 14.5% year-on-year growth compared to the same period last year.

  • EBITDA for the half-year was INR20.45 crores, an 8.3% growth year-on-year, and profit after tax came in at INR14.80 crores, up 8.1% over H1 financial year 2025.

  • The company maintains a debt-free position with cash investments of INR147.49 crores, indicating strong liquidity and balance sheet health.

  • The board approved a 10% interim dividend, and promoter shareholding increased to 47.67%, reflecting confidence in growth direction.

  • Secured a USD$400,000 product engineering contract and signed two marquee enterprise clients (FTSE listed real estate and NYSE listed medical technology) in pilot phases.

Concerns

  • EBITDA growth (8.3%) and PAT growth (8.1%) are lower than revenue growth (14.5%) due to planned investments.

  • H1 revenue growth from operations was 4.95%, significantly lower than the overall 14.5% growth, with other income contributing substantially.

  • M&A process is taking longer than anticipated, with only three companies shortlisted and no fixed timeline for deal completion.

Key financials

  1. Revenue ₹59.12 Cr +14.5%YoY
  2. EBITDA ₹20.45 Cr +8.3%YoY
  3. PAT ₹14.8 Cr +8.1%YoY
  4. EBITDA Margin 34.6%
  5. Cash Investments ₹147.49 Cr

What they filed

Q4 FY26: revenue up 10.6%, net profit up 0.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue47 50 50 53 52 +11%
EBITDA15 17 12 14 11 −27%
Net profit11 14 12 15 11 +0%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

medium confidence

Inflow this quarter

4,00,000 USD

Pipeline

deal pipeline tcv

Pipeline for more than $600,000 worth of contracts from international conferences and INR55 crores roughly for H2.

The company does not have a formal 'order book practice' but sees an increasing order book with predictable demand, with 90% of revenue being recurring.

Source: Prepared remarks

Capital allocation

high confidence
  • M&A Undisclosed Acquisition · Announced

    Capacity, capability, and market expansion, focusing on strengths in Salesforce, cloud, AI, or digital engineering.

    Talking about our M&A roadmap, we have earmarked around 40 crores this year for strategic acquisition. Our focus is on companies with strengths in salesforce, cloud, AI, or digital engineering. So far in the last six months, we have screened over 20 companies, and we are currently in active discussions with multiple shortlisted targets. We are approaching this with discipline. The goal is capacity capability and market expansion.
  • Liquidity Cash ₹147.49 Cr Strong liquidity and balance sheet health with a current ratio of 30.55.
    Our cash investments now stand at INR147.49 crores with a current ratio of 30.55, indicating strong liquidity and balance sheet health.

Guidance & targets

Revenue

  • Full Year FY26 Revenue Growth Revenue · FY26 · High confidence at least 15%
    Based on the current pipeline, wind velocity, and ongoing enterprise pilots, we reaffirm our full year guidance of at least 15% revenue growth for FY 2026.

    — Mukul Gupta

  • Long-term Revenue Growth Revenue · three years · High confidence double revenue
    Our long-term ambitions remain unchanged, which is to double the revenue in three years, establish leadership in Al delivery models, and expand global presence with local support in key markets.

    — Mukul Gupta

M&A

  • M&A Spend M&A · this year · High confidence around 40 crores
    Talking about our M&A roadmap, we have earmarked around 40 crores this year for strategic acquisition.

    — Mukul Gupta

  • Number of Acquisitions M&A · next three financial years · High confidence three acquisitions
    Yes, so we will continue our goal is to do like in the next three financial year, our plan is to do three acquisitions.

    — Mukul Gupta

Profitability

  • Margins Profitability · coming quarters · Medium confidence gradual expansion
    As these new practices scale, we expect a gradual expansion in both revenue momentum and margins in the coming quarters.

    — Mukul Gupta

  • Margins Profitability · Medium confidence around 25% plus
    So even after, let's say, one or two acquisitions, a margin should however around 25% plus, not below that, right? Yes, I believe so.

    — Mukul Gupta

What to watch in Q3 FY26

H2 FY26 Revenue Growth

next quarter (H2 FY26 results)
Current H1 FY26 revenue growth was 14.5% YoY.
Target much greater than the revenue growth in H1

Why it matters

Management expects H2 to significantly outperform H1, which is crucial for meeting the full-year guidance of at least 15% revenue growth.

So we believe that the revenue growth in H2 will be much greater than the revenue growth in H1.

Risks & concerns

  • Global market volatility and softer demands

    medium

    Despite global market volatility and softer demands in some regions, the company achieved 14.5% YoY revenue growth, reflecting consistent execution.

    Management acknowledged

  • Margin compression due to investment phase

    medium

    EBITDA growth (8.3%) and PAT growth (8.1%) are lower than revenue growth (14.5%) due to intentional investments in sales capacity, senior talent, and AI/Salesforce/cloud capabilities, which are expected to lead to future growth and margin expansion.

    Management acknowledged

  • Delays in M&A execution

    medium

    The M&A process is taking longer than anticipated, with only three companies shortlisted and no fixed timeline for deal completion, but the company is proceeding cautiously and has hired consultants to assist.

    Management acknowledged

Q&A highlights

6 direct
Appointment of local sales head in Middle East/UK Partial
We are yet to appoint a person in Saudi. It is predominantly due to the fact that we still haven't opened a local entity in these markets. As soon as we open that, we will appoint somebody over there. Right now, it is a leadership team. Our director of operations is directly responsible for that market and is frequently traveling over there.

Addresses market expansion strategy and execution in key geographies, explaining the delay in local hiring due to entity setup.

Asked by Sanket from Aarth AIF

Marketing spend vs IPO proceeds utilization Direct
So the expenses will come on month-on-month basis. Now the team has been setup in the first half. So going forward, we will see the expenditures. And regarding the trade show, we have already done the trade show bucket that has been mentioned in the object clause.

Clarifies the phasing of IPO fund utilization for business development and marketing, indicating that spending will increase in H2.

Asked by Sanket from Aarth AIF

Discrepancy in total income vs revenue from operations growth Direct
Yes, that's a very good question. Revenue from operations, so we maintain the guidance and the reason is the kind of pilot project that we are doing right now and the kind of pipeline that we foresee. So we believe that the revenue growth in H2 will be much greater than the revenue growth in H1. And regarding the second point, I will let Sanket, take that. Other income includes the income from the sale of investments and the interest income from the FD.

Explains the lower operational revenue growth in H1 and provides forward-looking confidence for H2, clarifying the source of other income.

Asked by Sanket from Aarth AIF

M&A acquisition timeline and process Partial
So we have been continuously been talking to multiple companies, evaluating them. But right now, there are only three companies whom we see as almost fit for our intent. But discussions really haven't matured to a stage where I can give a fixed timeline on when the deal would be completed or if we will proceed with any of these three companies. But we are working diligently towards that. And we have appointed a very renowned management consulting firm as well who is helping us with this whole M&A activity.

Addresses investor concern about delays in M&A execution, attributing it to a cautious approach and due diligence, with consultants now assisting.

Asked by Aquib Khan

Impact of interim dividend on funding future growth/M&A Direct
No, sir. Our cash position is fairly strong. And what we have done is I mean, if you look at this dividend, what we are doing is we are basically demonstrating value to shareholders that we're committing to like return value to them. So that's number one intent over here. And number two intent, we have viewed the dividend and this doesn't impact our cash position. So we have an ample war chest to pursue M&A and this dividend would not like impact that at all.

Reassures investors about capital allocation strategy and liquidity for growth initiatives, stating the dividend will not hinder M&A or growth plans.

Asked by Aquib Khan

Margin trajectory and investment phase Direct
No, that's a very, very astute observation, Darshilji. So to talk about margin, it is basically a deliberate and planned investment into our future. So in the last six months, we have been investing ahead of the curve to win larger and higher margin deals. For example, we have hired a new director for our AI center of excellence, a new head of demand generation. We have onboarded several senior architects and developers to build capability. Plus, we have expanded our Gurgaon development center to about 80 plus seater capacity to meet a new demand. And also that, I mean, with all the travel and international conferences.

Explains the current margin compression (around 26% in H1) as a result of strategic investments for future growth and higher-margin deals.

Asked by Darshil Jhaveri

M&A target profile and criteria Direct
So we are looking for a company which basically has to have practice around Salesforce, AI or Cloud. There are three exclusive, there might be some overlap in services, but there could be three exclusive areas that we are looking for. The company has to be growing, has to be profitable. And like, we are looking at the company at about, like, I mean, 2 million to 3 million in revenue. So that's the kind of a company that we are currently targeting for this financial year. And obviously, we're looking at companies in India. So we're not considering any companies outside India.

Provides clear criteria for potential acquisition targets, helping investors understand the M&A strategy and focus on Indian companies.

Asked by Darshil Jhaveri

Competitive advantage against larger IT companies Direct
So the two markets are completely different. When they are comparing capital numbers against its own peers, so where we stand out is our credentials. So for example, we are ISO 9001, 27001, SOC 2 type 2 compliant. So these clients, when they're working with us, they know that we have invested in the processes and the infrastructure to keep their data and IT safe, which a lot of smaller IT companies do not have. Secondly, if you look at our brand reputation, if you go to sites like Clutch, Trustpilot, G2 and good firms, we have about 300-plus five-star reviews, which is again way above any of our peers.

Explains the competitive advantage against larger players, citing credentials, brand reputation, and value proposition as key differentiators.

Asked by Sanket Sadh

2 min read 6 chapters

Detailed narrative

H1 FY26 Financial Performance and Strategic Investments

CapitalNumbers reported H1 FY26 total revenue of INR59.12 crores, a 14.5% year-on-year growth compared to the same period last year. EBITDA grew 8.3% to INR20.45 crores, and PAT increased 8.1% to INR14.80 crores. This period is characterized as a planned investment phase, with strategic outlays in sales capacity, senior leadership talent, and capabilities in AI, Salesforce, and cloud engineering, which have impacted short-term margin growth.

Market Expansion and Client Acquisition

The company participated in four major international conferences across the Middle East, UK, and Europe, generating over 500 qualified leads and a pipeline of over $600,000. New client wins include a USD$400,000 product engineering contract and two marquee enterprise clients (FTSE listed global real estate and NYSE listed medical technology) currently in pilot phases, validating the investment in global sales footprint. The company's top five customers now include a client from Saudi Arabia, a new addition in the last six months.

Capacity Building and Technology Focus

The Gurgaon Development Center has been expanded to 80+ seats, operating at 90% occupancy, and serves as the hub for AI, data engineering, and analytics. The Kolkata Development Center continues to deliver core digital engineering services. The company has also onboarded a Director for the AI Center of Excellence and a Head of Demand Generation, strengthening its technical and leadership capabilities, with mid-to-senior level hiring largely complete for this financial year.

M&A Strategy and Capital Allocation

CapitalNumbers remains debt-free with cash investments of INR147.49 crores. The company has earmarked around 40 crores for strategic acquisitions this year, focusing on companies strong in Salesforce, cloud, AI, or digital engineering. While the M&A process is taking longer than anticipated due to a cautious approach, three companies are currently shortlisted, and consultants have been hired to assist. The board approved a 10% interim dividend, and promoter shareholding increased to 47.67% after Mukul Gupta's personal purchase of 72,000 shares.

Margin Trajectory and Future Outlook

H1 FY26 EBITDA margin was 34.59% (reported), with management acknowledging an analyst's mention of 'around 26%' in H1 as a result of deliberate investments for future growth. Management expects a gradual expansion in both revenue momentum and margins in the coming quarters as new high-margin services scale. The company reaffirmed its full-year FY26 revenue growth guidance of at least 15% and aims to double revenue in three years, including through M&A activities.

Competitive Advantage and Client Engagement

CapitalNumbers attributes its success in winning deals against larger IT firms to strong credentials (ISO 9001, 27001, SOC 2), a robust brand reputation (high ratings on Clutch, Trustpilot, G2, Glassdoor), and a value proposition combining competitive pricing with strong capabilities. The company engages clients through 30-40 minute workshops to help them ideate on AI implementation, leading to new proposals and POCs, particularly with existing clients.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Information Technology earnings calls