CL Educate — Q2 FY26 earnings call

Call held 10 Nov 2025

Management summary

CL Educate reported robust H1 FY26 revenue growth of 64.43% and EBITDA growth of 100%, largely driven by the successful integration and performance of DEXIT Global. However, PAT saw a significant 80% decline due to increased finance costs from acquisition debt and higher depreciation. The EdTech segment is navigating market shifts and pricing pressures, while MarTech shows steady growth, particularly in international markets.

Highlights

  • Total revenue for H1 FY26 grew 64.43% YoY to ₹319 crores from ₹194 crores in H1 FY25.

  • Overall EBITDA increased 100% YoY to ₹50 crores in H1 FY26 from ₹25 crores in H1 FY25.

  • DEXIT Global, post-acquisition, contributed ₹139 crores to revenue and ₹38 crores to EBITDA in H1 FY26, showing strong integration and performance.

  • DEXIT's EBITDA grew over 40% from ₹27 crores to ₹38 crores, driven by higher volumes, better operating mix, and capacity utilization.

  • MarTech business showed a 6% YoY revenue growth, with international operations growing from ₹21 crores to ₹28 crores.

Concerns

  • Consolidated PAT declined significantly to ₹1.5 crores in H1 FY26 from ₹7.5 crores in H1 FY25, an 80% YoY decrease.

  • Finance costs increased substantially to ₹26 crores in H1 FY26 from ₹1 crore in H1 FY25, primarily due to acquisition-related borrowings.

  • Depreciation increased to ₹19 crores in H1 FY26 from ₹8 crores in H1 FY25, following capitalization of intangible assets post-purchase price allocation.

  • EdTech test prep business faces pricing pressure and a shift in student choices from offline to online and long-duration to short-duration programs.

Key financials

  1. Total Revenue ₹319 Cr +64.4%YoY
  2. EBITDA ₹50 Cr +100%YoY
  3. PAT ₹1.5 Cr -80%YoY
  4. Finance Cost ₹26 Cr
  5. Depreciation ₹19 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

  • DEXIT Global
    ₹139 Cr Revenue (H1 FY26)₹125 Cr Revenue (H1 FY25)12% Revenue Growth (YoY)₹38 Cr EBITDA (H1 FY26)₹27 Cr EBITDA (H1 FY25)40.7% EBITDA Growth (YoY)
  • MarTech Business
    6% Overall Revenue Growth (YoY)₹28 Cr International Revenue (H1 FY26)₹21 Cr International Revenue (H1 FY25)₹54 Cr India Revenue (H1 FY26)₹57 Cr India Revenue (H1 FY25)

Capital allocation

high confidence
  • Debt Gross ₹200 Cr Maturity: six-year debt
    Last year, we had taken an additional Rs. 200 crores of debt over and above our working capital requirements to fund the acquisition of NSEIT Limited and it's a six-year debt that we have taken on our balance sheet, which we hope to clear prematurely. So, the interest costs are on account of that and on account of the accounting adjustments related to INDAS.

Guidance & targets

Profitability

  • DEXIT H2 Performance vs H1 Profitability · H2 FY26 · Medium confidence a little bit better than H1
    While I would not recommend looking at it purely from converting H1 numbers into two and annualizing it, we do hope that H2 would be a little bit better than H1, given the number of exams and the nature of exams that we have in our pipeline.

    — Arjun Wadhwa

  • DEXIT Growth and Profitability Profitability · next four quarters · Medium confidence grow at a reasonable pace at a steady profitability
    DEXIT continues to deliver strong performance and stability post the integration.

    — Arjun Wadhwa

  • MarTech Business Growth and Profitability Profitability · next four quarters · Medium confidence grow at a reasonable pace at a steady profitability
    But overall Kestone in the MarTech business, will continue to grow at a reasonable pace at a steady profitability over the next four quarters.

    — Nikhil Mahajan

Margin

  • DEXIT Margins Margin · ongoing · High confidence won't move dramatically either upwards or downwards
    So, I think for margins, we should consider this as it is. can keep it. It won't move dramatically either upwards or downwards.

    — Satya Narayanan

Capex

  • DEXIT Investments Capex · next four to eight quarters · High confidence no significant investments that we foresee that are not linked to the commensurate growth with revenues or bottom line, EBITDA
    There are no significant investments that we foresee that are not linked to the commensurate growth with revenues or bottom line, EBITDA for the next four to eight quarters.

    — Satya Narayanan

Finance Cost

  • Finance Cost Dissipation Finance Cost · from Q4 onwards · Medium confidence dissipating
    And then from that quarter onwards, hopefully you will see that portion of our finance cost dissipating.

    — Arjun Wadhwa

What to watch in Q3 FY26

Completion of Capital Reduction Scheme

Q3/Q4 FY26
Current Ongoing, expected Q3/Q4 FY26
Target Completed

Why it matters

Completion will lead to the dissipation of ~₹5 crores/quarter in accounting-related finance costs, improving PAT.

This will continue probably through most of Q3 till the capital reduction is completed. And then from that quarter onwards, hopefully you will see that portion of our finance cost dissipating.

Risks & concerns

  • Pricing pressure in EdTech test prep segment

    medium

    Shift of students between offline to online, competition from online players, and growth in low-price segments are putting pressure on pricing, impacting ARPUs.

    Management acknowledged

  • High finance cost and depreciation impacting PAT

    medium

    Significantly higher finance costs (₹26 crores vs ₹1 crore YoY) due to acquisition-related borrowings and increased depreciation (₹19 crores vs ₹8 crores YoY) from intangible asset capitalization are reducing PAT.

    Management acknowledged

  • CUET implementation and market acceptance

    medium

    CUET is still a 'work in progress' with past glitches, but the increasing difficulty level over the last couple of years offers a 'green shoot' for its future relevance.

    Management acknowledged

  • Impact of Utsav business investment on MarTech EBITDA

    low

    Utsav, a new business in its investment phase, is causing a marginal 3% drop in MarTech EBITDA, expected to continue for the next four to six quarters.

    Management acknowledged

Q&A highlights

5 direct
High interest cost despite being debt-free Direct
Last year, we had taken an additional Rs. 200 crores of debt over and above our working capital requirements to fund the acquisition of NSEIT Limited and it's a six-year debt that we have taken on our balance sheet, which we hope to clear prematurely. So, the interest costs are on account of that and on account of the accounting adjustments related to INDAS.

Clarifies the source of increased finance costs, linking it to the DEXIT acquisition debt and accounting adjustments, correcting the analyst's premise of being debt-free.

Asked by Madhur Rathi

Seasonality and annualization of DEX business performance Partial
The DEX business is actually divided into two parts. There's Certifications and Examinations, which tend to flow in one particular way. And then there's on-demand testing, which tends to flow differently in terms of accreditations... While I would not recommend looking at it purely from converting H1 numbers into two and annualizing it, we do hope that H2 would be a little bit better than H1.

Provides insight into the operational dynamics of the DEXIT business, explaining why H1 performance cannot be simply annualized and hinting at a stronger H2.

Asked by Madhur Rathi

Guidance on future investments and capacity expansion Partial
As and when the business demands are such that it requires us to make investments, whether that's in people, whether that's in product, or whether that's in technology, we continue to do so. We don't constrain ourselves from that perspective.

Indicates a flexible, demand-driven approach to investments rather than fixed capex plans, suggesting capital will be deployed strategically as opportunities arise.

Asked by Pratik, Aditya

Decline in test prep business and standalone performance Direct
The test prep in different segments, as we said, it is in a bit of a flux. There are segments where we are seeing certain shifts in student choices. There is a shift that we are observing in terms of classroom versus online. Long duration program versus short duration programs. And in that mix, one of the things that consciously our business leaders are making a choice, are making a choice is to make sure that we hold on and improve our market shares. And in that battle, the ARPUs, the realizations per ticket is where it's getting a little compromised.

Explains the challenges in the EdTech test prep segment, including market shifts, pricing pressure, and the company's strategy to prioritize market share over ARPU in the current environment.

Strategic investment in DEX or fundraising in EdTech/MarTech Partial
I think in the next quarter, there are certain plans and there are some discussions that are already underway. We wanted to wait for the first two quarters post-integration to pan out well. Now since that has happened, we are putting together our updated plans for 2027 and 2028, and the board will convene shortly to debate various options. Chances are that it might be an equity raise, but when and how and how much, etc., we would request you to hold on for us to unveil that or share that maybe at the end of the next quarter.

Signals potential future capital raising activities, likely an equity raise, with more details expected in the next quarter, indicating strategic financial planning post-DEXIT integration.

Asked by Rahul Bansali

Rs. 200 crores cash on the balance sheet Direct
There is a capital reduction scheme that has come as part of the NSEIT acquisition that we undertook. And there's about Rs. 183 crores of cash that NSE had left behind on the balance sheet which belongs to them. Its interest will accrue to them, and we are simply the custodians of that while the capital reduction scheme is concluded. Those funds are not ours, they're held in an escrow account, and they'll be transferred to NSE investments on the conclusion of the capital reduction scheme which we're hoping will get concluded in Q3 and Q4.

Clarifies that a significant cash balance is not the company's own working capital but rather funds held in escrow for the previous owners of NSEIT, pending a capital reduction scheme.

Asked by Nitya Shah

DEX business margins, pricing, and potential price increases Direct
So, I think for margins, we should consider this as it is. can keep it. It won't move dramatically either upwards or downwards... As far as pricing is concerned, some of those which will be newer contracts, they might get a little better. Those that are already done and sealed for two years or three years or four years, with those terms already signed in on both sides, those will remain as they are.

Indicates stable margins for DEXIT and potential for improved pricing on new contracts, while existing long-term contracts will maintain current terms, suggesting a balanced pricing strategy.

Asked by Pratik Giri

Quantum of accounting entry for interest cost Direct
The accounting entry here is to the tune of about Rs. 5 crores a quarter. And this is on account of the Redeemable Preference Shares and their fair valuation that is done as part of INDAS. This will continue probably through most of Q3 till the capital reduction is completed. And then from that quarter onwards, hopefully you will see that portion of our finance cost dissipating.

Provides a specific quarterly impact of accounting adjustments on finance costs and a timeline for when this impact is expected to reduce, offering clarity on future profitability.

Asked by Pratik

3 min read 6 chapters

Detailed narrative

H1 FY26 Financial Performance Overview

CL Educate reported a significant financial uplift in H1 FY26, with total revenue growing 64.43% year-on-year to ₹319 crores from ₹194 crores in H1 FY25. This growth was primarily driven by DEXIT Global, which contributed ₹139 crores to the revenue. EBITDA also saw a substantial increase of 100% YoY, reaching ₹50 crores from ₹25 crores in the prior year. However, consolidated PAT declined sharply by 80% to ₹1.5 crores from ₹7.5 crores, mainly due to a higher finance cost of ₹26 crores and increased depreciation of ₹19 crores, both linked to the DEXIT acquisition.

DEXIT Global Integration and Performance

The acquisition of NSEIT Limited, now rechristened DEXIT Global, has been a strategic success, fully integrated within CL Educate. In H1 FY26, DEXIT contributed ₹139 crores to revenue, growing 12% from an adjusted ₹115-117 crores in H1 FY25. Its EBITDA also surged over 40% to ₹38 crores from ₹27 crores, attributed to higher volumes, an improved operating mix, and better capacity utilization across its 237 centers. The transition from an NSE company to a CL Educate group company has been smooth, with all client contracts successfully rolled over and new client acquisition progressing well.

EdTech Business Dynamics

The EdTech business, particularly test prep, is experiencing a period of flux with students shifting between offline and online modes, leading to pricing pressures. While market share has been retained, ARPUs are compromised. The company is focusing on launching new programs in segments like BBA-IPM, which shows promise, and low-price segments like test series and self-study programs. CUET remains a 'work in progress' due to past glitches, but an increasing difficulty level offers a potential for future growth. Platform monetization and institutional partnerships are also expanding, with AI being incorporated into academic support.

MarTech Business Update

The MarTech business demonstrated stable growth, with revenues increasing by 6% year-on-year. International market operations were a strong driver, growing from ₹21 crores to ₹28 crores. However, India business saw a slight decline from ₹57 crores to ₹54 crores. New activities like CXO engagement and audience generation programs are gaining traction. The 'Utsav' business, incorporated last financial year, is currently in an investment phase, causing a marginal 3% drag on overall MarTech EBITDA, which is expected to continue for the next four to six quarters before becoming accretive.

Capital Structure and Finance Costs

The company's finance costs significantly increased to ₹26 crores in H1 FY26, primarily due to the ₹200 crores debt taken for the NSEIT acquisition last year. Additionally, an accounting entry of approximately ₹5 crores per quarter, related to the fair valuation of Redeemable Preference Shares as part of INDAS, contributes to these costs. Management expects this accounting-related finance cost to dissipate after the capital reduction scheme, which involves ₹183 crores of cash belonging to NSE held in escrow, is concluded in Q3 or Q4 FY26.

Strategic Outlook and Future Plans

CL Educate is operating as a 'three-engine platform' with EdTech, MarTech, and DEXIT showing growth momentum and margin discipline. The company is focused on debt reduction from a medium to long-term perspective. Discussions are underway for potential strategic investments or fundraising, likely an equity raise, with more details to be shared next quarter. Management indicated that DEXIT margins are expected to remain stable, and no significant investments are planned for DEXIT in the next 4-8 quarters that are not linked to commensurate growth.

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

More Consumer Services earnings calls