Digitide Solutions Limited — Q2 FY26 earnings call

Call held 5 Nov 2025

Management summary

Digitide Solutions delivered a resilient Q2 FY26, with consolidated revenues growing 7% YoY, primarily driven by strong performance in its Tech and Digital segment. The company achieved a significant H1 revenue milestone and maintained robust TCV bookings, while also securing key partnerships and new client wins. Profitability was impacted by one-time demerger costs, but management expects margin expansion to become evident from Q4 FY26 as strategic investments begin to yield results.

Highlights

  • Consolidated revenues reached INR764 crores, up 7% YoY and 4% QoQ.

  • Tech and digital segment revenues surged 23% YoY and 16% QoQ, now contributing 30% of total revenue.

  • H1 revenues crossed INR1,500 crores, up 6.4% YoY, a significant milestone.

  • Booked INR550 crores in TCV this quarter, maintaining strong sales momentum with three consecutive quarters over INR500 crores.

  • Acquired 24 new logos and achieved Tier-1 partner status with AWS and Azure, unlocking deeper collaboration.

Concerns

  • Reported PAT was INR3 crores, significantly lower than Adjusted PAT of INR17 crores due to INR11.4 crores in demerger-related legal/professional fees and INR2.4 crores in stamp duty.

  • EBITDA margin remained stable at 11.1% QoQ but experienced a 360bps YoY compression in H1.

  • Softness in the domestic BFSI segment, particularly collections business, was impacted by regional floods.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹764 Cr
    YoY +7% QoQ +4%
  • Consolidated EBITDA
    ₹85 Cr
    QoQ +3%
  • Consolidated EBITDA Margin
    11.1%
  • Adjusted PAT
    ₹17 Cr
  • Reported PAT
    ₹3 Cr
  • Headcount
    56,324
    QoQ +2%

H1

  • Revenue
    ₹1,500 Cr
    YoY +6.4%

What they filed

Q1 FY27: revenue up 5.3%, net profit down 69.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ1 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue696 733 733 736 764 +10%780 +7%800 +9%775 +5%
EBITDA106 110 82 83 85 −19%88 −21%88 +7%77 −7%
Net profit55 29 -1 10 3 −95%-2 −107%-5 −260%3 −70%
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

Share of Revenue
₹764 Cr Total
  • BPM Segment ₹536 Cr 70.2%
  • Tech and Digital Segment ₹228 Cr 29.8%

Order book

high confidence

Total value

₹550 Cr

as of 2025-09-30 quantified

5% QoQ

Inflow this quarter

₹550 Cr

Execution

Large transformation deals have sales cycles of 6-9 months, quantum jump expected in 6-9 months.

Composition

Mix 4 contract types
  • Time and Material (T&M) 40%
  • Fixed Fee 33%
  • Transaction-based 20%
  • Outcome-based 10%

Share of order book by contract type

Pipeline

deal pipeline tcv

50% of new deals are AI-enabled

Strong sales momentum with TCV exceeding INR500 crores for the third consecutive quarter, driven by new logos and AI-enabled deals, with large transformation deals having longer sales cycles.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Gross ₹49 Cr
    strong balance sheet and remain well-funded with a quarter-end cash of INR77 crores, a gross debt of INR49 crores, and therefore a net cash of INR28 crores.
  • Liquidity Cash ₹77 Cr Net cash position of INR28 crores.
    strong balance sheet and remain well-funded with a quarter-end cash of INR77 crores, a gross debt of INR49 crores, and therefore a net cash of INR28 crores.

Guidance & targets

Revenue

  • Total Revenue Revenue · FY31 · High confidence USD1 billion
    I want to reiterate our 3x3x3 strategy, our roadmap to triple revenues to USD1 billion by FY31.

    — Gurmeet Chahal

  • Organic Revenue Growth Revenue · Accelerating in coming years to FY31 · Medium confidence 15-16%
    And so on the organic, we need to be growing in the 15% to 16% range. So if we exit this year at 10%, we should be accelerating that in the coming years, getting close to that 16% mark.

    — Gurmeet Chahal

Profitability

  • EBITDA Margin Improvement Profitability · FY31 · High confidence 200-300bps
    we will be improving EBITDA margin of 200%-300%.

    — Gurmeet Chahal

  • EBITDA Margin Expansion Profitability · Q4 FY26 exit · High confidence Evident
    when we exit this financial year, which is quarter 4, we will start seeing that expansion becoming evident.

    — Gurmeet Chahal

  • Margin Uptick Profitability · Later by Q4 FY26 · High confidence Positive uptick
    So we should be seeing an uptick later by quarter 4 of this year for sure. And this is consistent with what we had guided to the market that while the overall FY26 margins would be impacted by this transition and the investments, we would start seeing that positive uptick from quarter 4.

    — Suraj Prasad

Efficiency

  • Revenue per FTE Improvement Efficiency · FY31 · High confidence 2x
    you have guided 2x improvement in billing realisation per FTE by 31.

    — Gurmeet Chahal

Headcount

  • Professionals Upskilled for AI Headcount · Phase 1 (DigiAIWave) · High confidence 10,000
    In Phase 1, we are upskilling 10,000 professionals for AI scale.

    — Gurmeet Chahal

Market context

  • Revenue Growth Revenue · Q4 FY26 exit · High confidence Double-digit
    FY26 actually is not a flat year and we believe we will as we exit quarter 4, we'll actually be on the double-digit revenue growth.

    — Gurmeet Chahal

What to watch in Q3 FY26

EBITDA Margin Expansion

Q4 FY26 exit
Current 11.1% (stable QoQ)
Target Evidence of expansion

Why it matters

Management has guided for margin expansion to be evident by Q4 FY26, crucial for long-term profitability goals and validating strategic investments.

when we exit this financial year, which is quarter 4, we will start seeing that expansion becoming evident.

Risks & concerns

  • Macroeconomic Headwinds (US)

    medium

    Macroeconomic headwinds in the US are acknowledged, though the company's platform-led international business and focus on resilient verticals (Healthcare, Fast Growth Tech) provide partial insulation.

    Management acknowledged

  • Short-term Margin Impact from Strategic Investments

    medium

    Investments in becoming a standalone company, new leadership, and advanced capabilities have a short-term impact on margins but are deemed critical for long-term strategy and future success.

    Management acknowledged

  • Demerger-related Costs

    low

    Demerger-related transitions and exceptional costs, including legal, professional fees, and stamp duty (INR13.8 crores in Q2), are largely behind the company as of Q2 FY26.

    Management acknowledged

  • Localized Softness in Domestic BFSI/BPM

    low

    Softness in the domestic collections business within the BPM segment was attributed to devastating floods in specific regions, limiting collection ability.

    Management acknowledged

Q&A highlights

8 direct
EBITDA Margin Expansion Target & Baseline Direct
the benchmark for the long-term margin expansion is FY25 which we had clarified earlier also.

Clarifies the base year for the 200-300bps EBITDA margin expansion target by FY31, addressing analyst confusion about current vs. prior year margins.

Asked by Dhananjay Mishra

Continuation of Merger-Related Expenses Direct
the merger related expenses are done in this current quarter, which is quarter 2.

Provides clarity that a significant drag on reported PAT is now behind the company, signaling potential for improved reported profitability in subsequent quarters.

Asked by Dhananjay Mishra

Levers for 2x Revenue per FTE Improvement Direct
First is change and mix in favour of digital and technology. Second is more international revenue. And third is leveraging automation for our delivery, for our operations so that we can eliminate some of the low-value work and move the realization per FTE.

Details the strategic drivers behind a key efficiency metric, indicating how the company plans to enhance productivity and value capture.

Asked by Jyoti Singh

Softness in BFSI/BPM Segment Direct
the softness that we talked about or we mentioned is, in the domestic market, a significant part of our business is collections business where we collect on behalf of the banks. As you know, in the current in the quarter that went by, there were devastating floods in Punjab, Haryana, Uttarakhand, Himachal, and parts of Uttar Pradesh. So that -- those limited our ability to collect on behalf of our customers, which kind of reflected in the softness.

Explains the specific, temporary, and localized reasons for softness in a key segment, differentiating it from broader market trends or client-specific issues.

Asked by Pulkit Chawla

Impact of 24 New Logos and 50% AI-Enabled Deals Direct
24 new logos mean? They mean an opportunity for us to scale with them. 70% of our revenues come from customers who have been with us for five years plus. So growing with select customers is a very conscious strategy and the 24 new logos will give us the growth momentum in the years to come.

Clarifies the strategic significance of new client acquisitions and the company's 'AI-first' approach, highlighting future growth drivers and differentiation.

Asked by Zaki Nasser

Timeline for TCV Translation from Hyperscaler Partnerships Direct
These large transformation deals also have relatively longer sales cycles, could be anywhere between 6 to 9 months. ... to see a quantum jump, it will take 6 to 9 months, which is the nature of these kind of deals, Mr. Pratap.

Provides a realistic timeline for when the benefits of strategic partnerships and large deal wins will materially impact TCV and revenue, managing investor expectations.

Asked by Pratap

Billing Model Breakdown (T&M, Fixed Fee, Outcome-based) Direct
I think our T&M is about 40%. Fixed fee is about 30% to 33%. Transaction-based is about 20%. And the remaining roughly 10% is outcome-based.

Offers granular insight into the company's revenue mix by contract type, which can inform analysis of revenue predictability and margin profiles.

Asked by Sanjay Shah

Margin Anomaly Despite Tech & Digital Growth Direct
The tech and digital business or the contracts, they have an upfront transition. So typically in the first quarter of execution you don't see the impact. The margin impact is always back loaded in these projects. So that's the reason that you see that anomaly. I mean, I wouldn't call it an anomaly. It is the nature of that business.

Explains why increased contribution from higher-margin segments hasn't immediately translated to overall margin expansion, attributing it to the project lifecycle and investment phase.

Asked by Ankit Dharamshi

2 min read 7 chapters

Detailed narrative

Q2 FY26 Performance Overview and H1 Milestones

Digitide Solutions reported consolidated revenues of INR764 crores for Q2 FY26, representing a 4% sequential and 7% year-on-year growth. For the first half of FY26, the company achieved a significant milestone by crossing INR1,500 crores in revenues, marking a 6.4% YoY increase. Consolidated EBITDA for Q2 stood at INR85 crores, up 3% sequentially, with a stable margin of 11.1%, while Adjusted PAT was INR17 crores.

Tech & Digital Segment Drives Growth and Strategic Focus

The Tech and Digital segment demonstrated robust growth, with revenues surging 16% sequentially and 23% year-on-year to INR228 crores, now contributing 30% of the total revenue, up from 27% in Q1. This growth is primarily driven by AI-led transformation and digital solutions. The company's strategy emphasizes increasing the share of technology and digital offerings to achieve scalable profitability and accelerate international expansion.

Profitability Impact and Expected Recovery

Reported PAT for Q2 was INR3 crores, significantly impacted by INR11.4 crores in demerger-related legal and professional fees and INR2.4 crores in stamp duty. Management confirmed that most demerger-related transitions and exceptional costs are now largely behind. They anticipate margin expansion to become evident by the exit of Q4 FY26, with a long-term target of 200-300bps EBITDA margin improvement by FY31 from an FY25 baseline.

Strong Sales Momentum and AI-First Transformation

Digitide booked INR550 crores in Total Contract Value (TCV) this quarter, marking the third consecutive quarter of TCV exceeding INR500 crores. The company acquired 24 new logos and noted that 50% of new deals are AI-enabled, reflecting its 'AI-first' mantra. Digitide has also become a Tier-1 partner for AWS and Azure, which is expected to unlock deeper collaboration and early access to next-gen AI/ML innovation.

Talent Development and Operational Efficiency

The company is investing heavily in talent development, including expanding its AI Center of Excellence in Bangalore and launching 'DigiAIWave,' an upskilling program targeting 10,000 professionals in Phase 1 for AI scale. Operational excellence is being driven through automation, process optimization, and rigorous execution, aiming to improve revenue per FTE by leveraging a mix shift towards digital/technology, increased international revenue, and automation.

Capital Structure and Contract Mix

Digitide maintains a strong balance sheet with INR77 crores in cash and INR49 crores in gross debt, resulting in a net cash position of INR28 crores. The company's contract mix is approximately 40% Time and Material, 30-33% Fixed Fee, 20% Transaction-based, and 10% Outcome-based. The median deal term for larger AI-led engagements has shifted to 3 years with options for 1+1 year extensions, reflecting the rapid pace of technology change.

Segment Performance and Market Resilience

The BPM segment reported revenues of INR536 crores, broadly flat YoY and QoQ, demonstrating resilience despite softness in the BFSI sector, particularly in domestic collections impacted by regional floods. The international business grew 6% sequentially and 4% YoY, now contributing 37% of total revenue, supported by a focus on resilient verticals like Healthcare and Fast Growth Tech.

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