CL Educate — Q1 FY26 earnings call

Call held 8 Aug 2025

Management summary

CL Educate delivered strong consolidated revenue growth of 58% YoY to ₹149.84 crores and a 76% increase in operating EBITDA to ₹21.7 crores for Q1 FY26, largely driven by the DEXIT Global acquisition. However, the company reported a consolidated net loss of ₹3.71 crores due to higher finance costs from the acquisition loan and increased depreciation. While the EdTech segment faced market headwinds, MarTech showed modest growth with a strategic pivot towards AI, and emerging businesses like Utsav and 361 DM demonstrated positive traction.

Highlights

  • Consolidated Revenue rose impressively by 58% year on year, reaching ₹149.84 crores.

  • Consolidated Operating EBITDA increased by 76% to ₹21.7 crores.

  • DEX segment revenue grew 55.26% YoY to ₹59 crores, and its EBITDA more than doubled by 124.56% to ₹12.8 crores.

  • New significant contracts secured for DEX, including ₹24 crores from AYUSH Ministry, ₹14 crores from IIBF, and ₹15 crores from NISM.

  • BBA and IPM products recorded a 12% increase in billing.

Concerns

  • Consolidated net loss of ₹3.71 crores, compared to a profit of ₹4.2 crores in Q1 last year.

  • Finance costs increased significantly by ₹11.98 crores YoY to ₹12.7 crores due to the ₹200 crore acquisition loan.

  • Depreciation & Amortization expenses rose by ₹4 crores YoY, primarily from intangible assets created by the DEX acquisition.

  • EdTech (Test Prep) revenues declined marginally and EBITDA remained flat due to market shifts towards self-prep models and CUET impact.

  • Standalone operating revenue was down 9% to ₹77 crores, and standalone operating EBITDA was down 33% to ₹5 crores, leading to a standalone net loss of ₹4.1 crores.

Key financials

  1. Consolidated Revenue ₹149.84 Cr +58%YoY
  2. Consolidated Operating EBITDA ₹21.7 Cr +76%YoY
  3. Consolidated Net Loss ₹-3.71 Cr
  4. Consolidated EPS ₹-0.68
  5. Standalone Operating Revenue ₹77 Cr -9%YoY
  6. Standalone Operating EBITDA ₹5 Cr -33%YoY
  7. Standalone Net Loss ₹-4.1 Cr

What they filed

Q1 FY27: revenue down 12.5%, net profit up 55.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue98 70 97 146 164 +68%120 +73%118 +21%128 −12%
EBITDA11 -0 1 18 24 +121%4 +2607%3 +199%17 −1%
Net profit3 -3 -16 -4 5 +54%-17 −443%-10 +34%-2 +55%
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.

Segment breakdown

  • DEX
    ₹59 Cr Revenue₹12.8 Cr EBITDA
  • MarTech
    ₹37.2 Cr Revenue₹2.5 Cr EBITDA
  • EdTech (Test Prep)
    — Revenue Growth— EBITDA Growth
  • EdTech (BBA and IPM)
    12% Billing Increase
  • 361 DM Business
    ₹0.08 Cr EBITDA

Capital allocation

high confidence
  • Debt Gross ₹200 Cr Cost 11.9%
    • New borrowing Loan taken to fund DEXIT Global acquisition ₹200 Cr
    sharp increase in the finance costs compared to last year, 12 crores more, owing to the Rs. 200 crore loan that we have taken to fund this acquisition.

Guidance & targets

Debt

  • Debt Reduction Debt · next 3 years · Medium confidence Significantly reduce quantum of debt
    we're looking at a three-year window in which we're looking to significantly reduce the quantum of debt that we've taken.

    — Arjun Wadhwa

MarTech Profitability

  • MarTech EBITDA MarTech Profitability · rest of the quarters (FY26) · Medium confidence Broadly coming back on track
    as we get into Q2 and Q3, these are heavy and high margin businesses, we would see the overall EBITDA broadly coming back on track during the rest of the quarters.

    — Nikhil Mahajan

  • Margin expansion from AI-first transformation MarTech Profitability · next year onwards · Medium confidence Start reflecting
    resulting in margin expansion, which would probably start reflecting next year.

    — Nikhil Mahajan

EdTech Revenue

  • EdTech Revenue EdTech Revenue · FY26 · Medium confidence Stay around same level, bump up by year-end
    EdTech revenues are likely to stay around the same level in the near future, though I would expect a bump up by the end of the year.

    — Gautam Puri

  • Significant jump in EdTech revenues EdTech Revenue · next 2-4 quarters · Medium confidence Significant jump
    My personal feeling is possibly another two to another four quarters but if we are able to play our card well, that maybe in another two quarters we will be able to see a significant jump in the numbers in terms of revenue also.

    — Gautam Puri

361 DM Business

  • Revenue and EBITDA profitability 361 DM Business · next 4-6 quarters · Medium confidence Rapid increase
    over the next four to six quarters, will see a rapid increase both in revenue and the EBITDA profitability.

    — Nikhil Mahajan

Synergy-driven Revenues

  • Benefits from synergies (CL, DEX, Kestone) Synergy-driven Revenues · next 2-4 quarters · Medium confidence Visible benefits
    benefits of those both on the CL side and DEX side as well as on the Kestone side, two to four quarters from now.

    — Satyanarayanan R.

Overall Results

  • Visibility of results from initiatives Overall Results · next 2-4 quarters · Medium confidence Show themselves up
    That also you must count as between two to four quarters for the results to show themselves up.

    — Satyanarayanan R.

Market context

  • DEXIT Global IPO Subsidiary IPO · next 3 years · Medium confidence Fructify potential IPO
    a potential IPO for that business in due course. We're looking at a three-year window for that to fructify.

    — Arjun Wadhwa

What to watch in Q2 FY26

DEXIT Global assets delivering value

coming quarters
Current Short to medium-term hurdles impacting profitability
Target Ease of hurdles, positive contribution to profitability

Why it matters

Essential for the company to return to overall profitability and justify the acquisition.

These are short to medium-term hurdles that we anticipated. We are confident they will ease in the coming quarters as the new assets begin to deliver value.

Risks & concerns

  • Increased Finance Costs and D&A from DEX Acquisition

    high

    ₹11.98 crores YoY increase in finance costs and ₹4 crores YoY increase in D&A led to a net loss despite strong revenue growth.

    Management acknowledged

  • Structural Shift in Test Prep Market

    medium

    Shift towards self-prep models and shorter, lower-value programs impacting EdTech (Test Prep) revenues and profitability, expected to be a 4-6 quarter issue.

    Management acknowledged

  • Short-term Profitability Impact from Investments

    medium

    MarTech EBITDA dipped slightly due to investment phase in building international presence and technological capabilities, including AI-first pivot, with benefits expected from next year.

    Management acknowledged

Q&A highlights

6 direct
Impact of DEX acquisition on Depreciation and Interest Costs Direct
The Depreciation for the same quarter last year was about Rs. 4 crores. This year it is in excess of Rs. 8 crores. Out of that additional Rs. 4 crores that has come in, about Rs. 2.3 crores belong to the intangible assets that were created as a result of the purchase price allocation exercise done at the time of the acquisition of DEXIT... The interest costs are impacted significantly by the cost of the acquisition... annual interest cost of about Rs. 24 crores for this year, which would translate about six to six and a half crores hitting our P &L every quarter this year.

Clarifies the primary drivers behind the consolidated net loss, attributing it directly to the DEXIT acquisition's financing and intangible asset amortization.

Asked by Gunit

Seasonality in DEX business Direct
there is a little bit of seasonality, but we have two kinds of customer contracts in the DEX business. A - there are annual contracts where students come and book slots and take exams whenever they want... And then there are other exams which are date specific. For example, the Directed General of Training (DGT) exam that happens in the second quarter of the year.

Provides insight into the revenue predictability and lumpiness of the DEX business, indicating Q2 will see a revenue accumulation from date-specific exams.

Asked by Aditya

Outlook for Utsav (Social Events) business Direct
we have closed five projects for the weddings to be executed from now till March as of now... most of the event executions for the first closure are happening in Q2. There are a few projects lined up for execution in Q3 and early Q4.

Gives a clear timeline for revenue recognition and pipeline visibility for a new, high-potential business segment.

Turnaround of 361 DM business Direct
this was the first quarter when that business reported a positive EBITDA, even if it was a small amount of 8 lakhs during the quarter... over the next four to six quarters, will see a rapid increase both in revenue and the EBITDA profitability.

Signals a positive inflection point for a previously struggling segment, with a clear outlook for future profitability.

EdTech revenue trajectory and market shifts Direct
Test prep industry, especially the graduate student segment is in a churn... movement away from a completely guided program to a self-sufficiency kind of program... revenues from the test-prep domain have come down by about 11%... EdTech revenues are likely to stay around the same level in the near future, though I would expect a bump up by the end of the year.

Highlights the structural challenges and market shifts impacting the core EdTech business, explaining the current revenue stagnation and the need for strategic recalibration.

Synergies between MarTech and DEX businesses Direct
benefits of those both on the CL side and DEX side as well as on the Kestone side, two to four quarters from now... internationalization is another thing where Kestone and DEX and CL and DEX will work closely because of their physical presence in some geographies outside of India.

Provides insight into the strategic rationale behind the DEXIT acquisition beyond just standalone growth, focusing on cross-leveraging capabilities and international expansion.

3 min read 6 chapters

Detailed narrative

Strong Consolidated Revenue Growth Driven by DEXIT Global

CL Educate reported a robust 58% year-on-year increase in consolidated revenue, reaching ₹149.84 crores for Q1 FY26. This growth was primarily fueled by the DEXIT Global acquisition, which contributed ₹59 crores in revenue, a 55.26% YoY increase for the segment. Consolidated operating EBITDA also saw a significant jump of 76% YoY to ₹21.7 crores, demonstrating improved operational efficiency and strong performance from the newly integrated business.

Profitability Impacted by Acquisition-Related Costs

Despite strong top-line growth, the company recorded a consolidated net loss of ₹3.71 crores in Q1 FY26, a decline from a profit of ₹4.2 crores in the prior year. This was largely due to a sharp increase in finance costs, which rose by ₹11.98 crores YoY to ₹12.7 crores, attributed to the ₹200 crore loan taken for the DEXIT acquisition at an 11.9% interest rate. Additionally, depreciation and amortization expenses increased by ₹4 crores YoY, primarily from intangible assets created during the DEXIT purchase price allocation.

EdTech Segment Faces Market Headwinds and Strategic Recalibration

The EdTech segment, particularly the test prep vertical, experienced a muted quarter with marginal revenue decline and flat EBITDA. This was attributed to the impact of CUET and a broader market shift towards self-prep models in MBA education, leading to students opting for shorter, lower-value programs. In response, CL Educate is recalibrating its strategy by launching smaller value SKUs to maintain volumes despite decreased average pricing, while BBA and IPM products showed resilience with a 12% increase in billing.

MarTech Business Pivots to AI-First with International Expansion

The MarTech division recorded a modest 7% revenue growth, reaching ₹37.2 crores, though its EBITDA dipped slightly to ₹2.5 crores due to investment in building capabilities. The segment is actively pivoting towards an AI-first practice, with initiatives like the VIRSA lead generation tool gaining traction with major clients and new resellers onboarded in Singapore and Indonesia. Management expects this transformation to be completed by year-end, driving margin expansion from next year onwards, with larger benefits accruing in FY27.

DEXIT Global Integration and New Contract Wins

DEXIT Global continues to be a strategic asset, with Q1 FY26 revenue growing 55.26% YoY to ₹59 crores and EBITDA more than doubling to ₹12.8 crores. The company successfully retained key clients post-acquisition and secured new contracts, including a ₹24 crore deal with the AYUSH Ministry, a ₹14 crore deal with IIBF, and a ₹15 crore deal with NISM. Over 1.7 million assessments were executed in the quarter, and management is exploring cross-leveraging contacts with the MarTech business for future growth.

Emerging Businesses Show Positive Traction

Newer initiatives like the Utsav (social events and weddings) business are gaining traction, with five wedding projects closed and more in the pipeline for Q2 and Q3 FY26, expected to provide significant tailwind. The 361 DM business also reported its first positive EBITDA of ₹8 lakhs in Q1 FY26 after several quarters, with expectations of rapid revenue and EBITDA growth over the next four to six quarters, signaling a turnaround for this segment.

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